As retailers look to clear their shelves of excess inventory, shoppers may see greater discounts and savings.
Key Details
- High inflation and extra inventory have minimized retailers’ profit margins—leading to competitive sales to draw in more customers.
- Some CEOs are saying that markdowns and price reductions are needed in order to move the excess stock gained earlier in the year.
- Quickly shifting consumer buying habits surprised some retailers this year, leaving them with high inventory levels.
- The additional sales and greater discounts may be an opportunity for retailers to attract a greater number of customers—at a cost to their bottom line.
Why it’s important
During a time of changing consumer habits, CEOs have different takes on what the best strategy is to move inventory without incurring significant losses.
Gap CFO Katrina O’Connell says the clothing retailer is looking to ensure their discounts come at the right time. Too early and the demand isn’t there; too late and consumers have moved on.
At major retailer Macy’s, CFO Adrian Mitchell says the company will evaluate the need for markdowns weekly. Bed, Bath & Beyond is also looking to clean out inventory and plans markdowns and sales—similar to sales the company has had in recent months.
Both Kohl’s CFO Jill Timm and Target CFO Michael Fiddelke say that significant sales are expected this quarter. Timm says that the promotions will “be widespread” across many categories. Fiddelke warned that Target’s profit margin is not at the preferred level, but was hopeful that the promotional season would help get the company back on track.
Footlocker, Williams-Sonoma, and TJX companies have all said that they expect more promotions and markdowns this season.
