Finance

Markdown Mania—TVs, Furniture, Leisure Wear And More—Hits Major Retailers Moving Excess Inventory On Pandemic-Era Goods

06/08/2022
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Topline

Target this week announced it had followed in the footsteps of a host of other major retailers that purchased too much of certain goods—now customers may see major markdowns on goods like apparel, furniture and home products as chain stores consider slashing prices to adjust to new consumer preferences.

Key Facts

Target announced on Tuesday it will cancel orders from suppliers and cut prices on home goods like TVs (some, like this 43-inch Samsung that’s 25% off) and outdoor furniture (like this patio set at 52% off) to make room for more in-demand items like groceries and beauty products.

Major retailers like Gap and Macy’s are also trying to get rid of a glut of pandemic-era apparel such as active and leisure wear (like these leggings, discounted from $60 to $12) as customers look for clothing suitable for the office.

Walmart—which saw a 33% surge in inventory last quarter—offered 25% off technology and home goods in early May, while tech products were only 10% off the same time last year, according to Reuters.

Costco said last month its shelves were stocked with too many holiday goods and small appliances—like this Ninja blender it’s offering at a discount of $30—while Best Buy saw lower demand for its computers, some of which are on sale for as much as $300 off.

Key Background

Changes in consumer preferences two years into the Covid-19 pandemic, supply chain delays and limited discretionary spending are some of the main reasons behind the glut of inventory. Consumers are leaving behind pandemic comfort clothes such as athletic and leisure wear for office clothing, fancier apparel and makeup for public outings. The changes come as retailers are finally reaching healthy inventory levels after supply chain disruptions during the pandemic led to shortages. The pandemic—including federal stimulus funds—also fueled some shoppers’ purchases of more expensive goods like computers, flat-screen TVs and other home goods. But now, those customers are spending more on services like dining out and travel, while others are cutting back on discretionary spending altogether due to inflation.

What To Watch For

A summer filled with promotional offers after a year of few discounts due to tight supply caused by worker shortages, supply chain bottlenecks and port slowdowns during the pandemic. Customers may also be able to find more bargains at discount stores like Burlington and Ross as major retailers look to get rid of excess inventory by selling to discount chains.

Further Reading

Target Inventory Warning Portends Retail Bloodbath (Wall Street Journal)

U.S. retailers’ ballooning inventories set stage for deep discounts (Reuters)

Too Much Of A Goods Thing: Retailers Are Drowning In Inventory (Forbes)

Source: https://www.forbes.com/sites/madelinehalpert/2022/06/08/markdown-mania-tvs-furniture-leisure-wear-and-more-hits-major-retailers-moving-excess-inventory-on-pandemic-era-goods/