So what happens when inflation is high, everything seems to cost more and consumer confidence is reaching rock-bottom?
One outcome tends to be inventory glut. And no one’s having a harder time moving product these days than retailers.
The retail sector’s pain could provide relief for plenty of businesses looking to spruce up their workspaces or are starting to grow coming off the coronavirus pandemic.
Now may be the perfect time to take advantage of:
- replacing office furniture and decor
- upgrading IT equipment and other tech needs, and
- stocking up on certain bulk items.
Retailers getting desperate enough to slash prices?
A few weeks back, Target reported unsold inventory valued at just over $15 billion is 43% higher than last year. Target is reportedly reducing its inventory of TVs and small kitchen appliances to adjust.
It’s a similar story for other big box retailers. Wal Mart employees revealed to Business Insider their stores and warehouses are overstocked to the point of chaos. Wal Mart’s inventory glut was last reported at about 32%.
Companies like Wayfair, which specializes in home and office furnishings, reported a half-billion dollar drop in year-to-year net sales in the first quarter. Even Costco, the members-only bulk grocery chain, is stuck with 26% more inventory than it wants (TVs, appliances, clothing, books).
The big box retailers aren’t the only ones struggling. Local mom-and-pop shops selling durable goods are stuck with stuffed shelves too. Many are cutting prices or thinking very hard about it.
Despite all this gloom and doom, retailers say they’re still bullish on consumers, and consumer confidence, bouncing back soon.
Unfortunately many in the sector predict inventory glut will persist into 2023. Doesn’t sound like they’re too optimistic that Black Friday and the Christmas shopping season will be strong enough to clear significant space.
Reminder: Early September a good time to buy
Don’t forget that many states, hopefully yours, offer sales tax holidays for items employees want or are required to use.
For example, from September 3 to 9 this year, Florida waives sales taxes on items like:
- Work gloves that sell for $25 or less a pair
- LED flashlights, hand tools and protective coveralls that sell for $50 or less per item
- Work boots for under $175, and
- Power tools and toolboxes for vehicles worth $300 or less per item.