Overstocked inventory could mean greater savings during the holiday season.
Key details
As retailers try to cut down their overstocked inventory, shoppers can expect more holiday sales this season, a welcome reprieve from inflated prices.
Anticipating continuing shipping delays, many large retailers ordered additional inventory last year, but shipping delays lessened and inflation lowered buyer demand, leaving retailers with excess inventory.
Macy’s is just one of the latest retailers to introduce additional sales. The holiday shopping season may start as early as October. Since 2020, holiday shopping has started earlier as shoppers try to avoid holiday crowds.
On Tuesday Macy’s said that consumer concerns about necessities like groceries made discounts necessary. With rising grocery prices, shoppers have less to spend on additional items.
Why it’s news
While more sales around the holidays may be beneficial for consumers, it’s more evidence of struggling retailers adapting to an increasingly volatile market.
As retailers are forced to sell products at reduced prices, overall profit margins will be smaller. Target and Walmart warned investors earlier this month that their profits would be lower due to the glut of inventory.
Narrower profit margins could spell trouble for retailers already tightening their belts in anticipation of a recession.
Backing up a bit
Macy’s isn’t the only retailer extending their clearance section. Notably, Walmart and Target warned investors that their profits would be lower than expected as they increased sales to offload inventory.
Clothing that was popular during the pandemic, such as loungewear, casual wear, and athletic wear are among the overstocked items being discounted.
Companies like Peloton are also suffering from a sudden drop in demand. During the pandemic, Peloton saw an increase in orders. Anticipating continued interest, the company prepared to move production to a U.S. based location. Following the steep drop in demand, the high-end, indoor bike manufacturer canceled its plans.
Notable quote
“We are targeting appropriate inventory levels by the end of the year and plan to be aggressive and taking the necessary markdowns to drive faster sell-throughs in our aged inventory in seasonal goods, private brand merchandise and pandemic-related categories,”Macy’s CEO Jeff Gennette said.
