Large-scale retail distributors in the United States pointed out that with the rise of inflation and the change of consumption habits of terminal demand, the previous active purchase of goods in the port of Serbia has resulted in high inventory and a significant increase in costs, which has forced distributors to enter the discount war and start to sell at discounted prices. out of these items in stock.
Costco (COST-US) said this week that as of the financial report on May 8, inventories increased by 26% year-on-year to $17.623 billion, of which hundreds of millions of dollars came from inventories in the peak consumer season last year, as well as a certain percentage of small appliances and household goods.
Macy’s (M-US) CEO Jeff Gennette said that the recent easing of supply chain problems has brought overseas goods to Hong Kong ahead of schedule, and the company’s inventory has increased by 17% compared with last year. Walmart (WMT-US) inventory in logistics centers also increased by 32%, and Target Department Store (TGT-US) inventory was up 43% from a year earlier, and Best Buy (BBY-US) Inventories increased 9% year-on-year.
Citi said that the average U.S. inventory growth rate of retail distributors in the first quarter was faster than revenue growth, and 11 of the 18 distributors saw inventory growth faster than sales growth by 10 percentage points. This is the first time since the outbreak of the epidemic; With soaring inflation and rising fuel prices, consumers are rapidly scaling back their spending on clothes, televisions and high-margin appliances.
Walmart and Target said that with inflation raising prices for everything from TVs to toothpaste, some low-income consumers have curbed spending; high-spending groups have begun to snap up shopping for outings, such as suits, dresses, etc. Macy’s also pointed out that consumption Consumers’ shopping habits have changed, and the consumption of household goods is decreasing, and they have begun to purchase clothing and goods for outing occasions.
High inventories and slowing spending have prompted retailers such as Walmart and Macy’s to push for a promotion war, at the risk of sacrificing profits. Walmart Chief Executive Doug McMillon said Walmart has begun offering aggressive discounts to boost sales of high-margin items such as clothing.
According to research by Jane Hali & Associates, Walmart launched a super discount of 35% in early May, with a 25% discount on electronics and household items, and only a 10% discount on electronic products in the same period last year.
Research StyleSage data shows that Macy’s, Kohl’s (KSS-US) and other mid-tier department stores expanded their discounts in mid-May, with regarding 57% of items being discounted; as of mid-May, 36% of the overall retailer’s apparel items were being discounted.
