Excess inventory, low-price sales! US retail giants have launched a "clearance wave"

It is learned that due to high inflation and rising gasoline prices, American consumers adjusted their spending, causing retail giants to make mistakes in their predictions, resulting in a large amount of redundant inventory. Under cost pressure, these retail giants launched offline discount activities to clear out excess inventory, setting off a "clearance wave".

For retail giants, this would have been unimaginable a few months ago. But the overall environment cannot be shaken, and retailers can only make adaptive adjustments to minimize losses.

Costco said its overstock increased 26% in the fiscal third quarter ended May 8, including “hundreds of millions of dollars” in holiday season inventory and a large number of small appliances and home furnishings. At Gap, overstock increased 34% due to weak sales and longer shipping times.

Similarly, Macy's CEO Jeff Gennette said: "The supply chain crisis is easing, resulting in goods being received from overseas earlier than we expected. At the same time, consumers are adjusting their spending and reducing purchases of items such as home furnishings."

According to Citi's survey of the first quarter performance of 18 U.S. retailers as of May 22, the average inventory growth rate in the U.S. retail market was faster than the sales growth rate. Among them, the inventory growth of 11 retailers was more than 10% higher than the sales growth, which was the largest gap since the outbreak.

Retailers scrambled to keep inventory well stocked during the supply chain crisis, but consumers bought fewer high-margin clothing, televisions and appliances as prices rose.

Walmart and Target said some lower-income consumers have cut back on spending as inflation pushes up prices for everything from televisions to toothpaste. Higher-income people have shown more resilience, spending more on suits, dresses and shoes.

As storage costs rise, excess inventory will also incur high storage fees, a situation that is prompting U.S. retailers such as Walmart and Macy's to launch large-scale promotions.

Midsize department stores such as Macy's and Kohl's (KSS.N) stepped up price promotions in mid-May, with 57% of merchandise on sale, according to research firm StyleSage.

In the apparel category, retailers were discounting 36% of merchandise as of mid-May, up from 32% for the entire month of April, according to StyleSage. However, average discounts have remained steady at 12% since January.

Walmart is offering up to 65% off top items and up to 25% off tech and home products during the week of May 9. During the same period last year, tech deals accounted for only 10% of sales, and home deals were limited to select items.

Editor✎ Ashley/

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