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Why many retailers are facing excess inventory this season

By Don-Alvin Adegeest

Jun 8, 2022

Retail

Image: Asos Black Friday Deals

Shifts in consumer behaviour are difficult to forecast, with many largescale retailers facing excess inventory this season. As shoppers shifted from buying into comfortable fashion categories that were high in demand during lockdowns, retailers needed to have invested into occasionwear as much as casualwear, less on homeware and perhaps more on day to day accessories and travel, as the world sought to reconnect in person.

High-end e-commerce platforms including Net-a-Porter, Matchesfashion, Mytheresa and Ssense starting discounting early this season and are all offering discounts up to 50 percent.

Other retailers, such as brick and mortar department stores, are feeling the strain of excess inventory, with Macy’s and Target thought to be adjusting their profit outlook with more stock on hand than was forecast to be sold.

The Wall Street Journal on Wednesday said retail CFOs are resorting to discounting excess stock, which will eat into margins, while trying to rely on predictive analytics to manage inventory. With many bottlenecks remaining in global supply chains, delayed deliveries have been plaguing retailers over two years.

“The shift just happened at a quicker pace than expected,” a Macy’s spokeswoman told WSJ. The New York-based company said it “received more inventory than it anticipated as some of the constraints facing its supply chain began to ease.”

Large stockpiles

Macy’s isn’t the only retailer with a large stockpile of products that need discounting to be sold. Target last month in an earnings call said it ended up carrying too much inventory in several categories.

When factories closed or operated at limited capacity many retailers upped their inventory buys, to prepare for any material shortages and supply chain disruptions, like that of the Ever Given. Some are thought to have as much as 40 percent extra inventory on hand in comparison to last year.

While the news is challenging to finance chiefs and retailers, consumers will have a greater choice of bargains this season.

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MACY'S