9/21/2023 0 Comments Target excess inventorySome businesses are so concerned about storage that they’re even weighing a “returnless return” policy, CNN reports. And Roberson says she expects more sales to come over the next few months, especially for items like furniture, both because demand has dropped and because companies are running out of room to store these big, bulky items. Walmart, Target, and a slew of others have already slashed prices on some of their excess merchandise. What does excess inventory at stores like Walmart and Target mean for shoppers? “There’s probably 20 percent of, if you could just wish away and make it disappear, you would,” John Furner, the CEO and President of Walmart U.S., told analysts in June. Target’s first-quarter earnings report looked similar, and Gap, which includes Old Navy, Gap, Banana Republic, and Athleta, said its inventory rose 34 percent. But some of that merchandise arrived late because supply lines are still being impacted by Covid-19 lockdowns in China, which have shut down major ports, CNBC reports. Walmart reported in May that its inventory increased about 33 percent as the company made aggressive purchases to keep shelves stocked. “These retailers have come out and reported that they have too much inventory and not the right type of inventory on hand,” she tells KCM. The big ones - like Walmart, Target, and Amazon - “loaded up their pipelines with incoming inventory, created an enormous expansion in physical space, and hired hundreds of thousands of people” to meet this unusual demand, he says.īut that frenzy has ended, and some companies are now feeling the sting of the bullwhip, industry expert Cathy Roberson explains. Retailers went into hyperdrive to satisfy that shift, Cohen says. Demand for items like suits and formal wear dried up as people abandoned offices, while the need for things like cleaning supplies, home-gym equipment, and furniture surged. Consumers began to hoard as panic set in (which, as we all remember, led to the horrors of the toilet paper shortage). In 2020, when the virus brought the world to a standstill, products weren’t being assembled and things weren’t being shipped. “But Covid was this all-encompassing disruption that just completely overwhelmed the world in a way that we haven’t experienced since World War II.” “Feast or famine issues with inventory aren’t new,” Cohen says. That distortion gets passed along, and is typically amplified, at each step of the supply chain, creating inefficiencies like long wait times for products and the surplus we’re seeing now. The term describes how businesses tend to react to a surge in demand by over-ordering to avoid shortages. Companies are stuck with too much stuff, their warehouses are full, and they’re taking some creative measures to get rid of that excess inventory, according to Mark Cohen, the director of retail studies at Columbia Business School.Įconomists call this phenomenon the bullwhip effect. Now, the pendulum has swung the other way. Three rounds of stimulus checks and the promise of new Covid-19 vaccines had primed consumers to go big for the holiday shopping season, but a gummed-up supply chain and a labor shortage left retailers scrambling to meet the soaring demand. Think back to the winter of 2021, when stores struggled to keep shelves stocked with everything from Xbox consoles to artificial Christmas trees.
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