Excess inventory + soaring returns! US retailers are under great pressure after the peak season!

According to the latest survey of 500 US retailers by Inventory Planner, an e-commerce inventory planning software provider, 50% of retailers still face the problem of excessive inventory after Christmas and January promotions. Nearly half (46%) of retailers said that excessive inventory is the biggest challenge at present.

More than half of U.S. retailers (53%) also said their business would be in “serious jeopardy” if they were unable to sell excess inventory, and nearly six in 10 (58%) retailers feared they would have no choice but to liquidate excess inventory through discounting.

Many retailers also said they have problems managing and tracking excess inventory, in many cases:

• One in six retailers admitted they found it almost impossible to know how much stock they would need in the coming months.

• More than a quarter (27%) do not know how to calculate excess inventory.

• More than half of respondents (53%) plan to offer more discounts to try to shift unwanted products.

The survey also found that small retailers (with annual revenues of $100,000 to $1 million) have an average of $48,000 in excess inventory, equivalent to 22% of their overall inventory. Large retailers face greater pressure on excess inventory than small retailers. Currently, 59% of large retailers (with annual revenues of $100 million to $500 million) have excess inventory, while the proportion of small retailers is 45%.

Additionally, by category, baby and toddler retailers face the greatest challenge with excess inventory (92% of retailers in this category have excess inventory after the holidays), followed by luxury goods (55%), homewares/DIY and gardening (50%) and apparel (44%).

“Excess inventory is a huge problem for U.S. retailers this time of year. The wave of returns that follows the peak trading period in January and early February will exacerbate these problems,” said Sara Arthrell, chief marketing officer at Inventory Planner.

The survey from BDO also showed that in order to prepare for a potential recession, 49% of US retailers are focusing on reducing their excess inventory. Other key strategies include adjusting the cost structure of SKUs, creating liquidity (47%) and increasing promotional sales and discounts (43%).

Editor ✎ Nicole/

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