Over the past two years, COVID-19 has left everyone in the retail supply chain in a frenzy. In 2020, capacity constraints were widespread with surge in online-business whereas in 2021, supply chain issues further upstream led to lower-than-anticipated holiday volumes. Retailers were faced with a difficult choice: buy and store greater quantities of goods to reduce the likelihood of out-of-stock products or risk having shelves that are completely bare to properly adjust their inventory.
In the wake of previous supply chain uncertainties particularly in the upstream supply chain, many retailers chose to stockpile their inventories. Although, many of the difficulties that various nodes across the supply chain must deal with have been eased, one, is still very much in the forefront; overstock. The surge in online-shopping caused by the pandemic is beginning to level down and many shipping rates have started to decline. Retailers are no longer racing to stock up on products in anticipation of a surge in consumer demand; instead, they are slashing prices across the board to get rid of surplus stock.
Retailers are offering massive discounts to clear their inventory ahead of the peak season. Purchasing power of consumers has been greatly affected by the rising talks of an inflated economy over the past year, which has forced many retailers to offer massive discounts and alter marketing strategies to get rid of inventory. These strategies include online discount codes, in-store select product sales and redesigned packaging for old inventory to create capacity for holiday stock. Major retailers like Walmart are reporting to offer more discounts on its toys stock this year. Similarly, retailers such as GAP and ULTA are planning to offer massive discounts ahead of the peak season as well. Are these discounts lucrative enough to push the inflation-stricken consumers to make purchases? As we await the outcome, one thing for sure is that without consumer spend, inventories will remain high, and retail supply chain activity will continue to slow.