Big Box Retailers Prepare For A ‘Much Bigger’ Holiday Season With Inventory Contest
With retailers betting on a bigger and better holiday season than 2020, many stores are bracing for what will likely be intense demand. Of course, this year they’re also gearing up for more than the season’s hottest toy and electronics sales, as the race is on to have the highest level of overall product inventory as well.
After depressed pandemic levels in 2020 and factory closures and shipping bottlenecks that caused headaches when it comes to items still in stock, big box stores such as Best Buy, Target, Walmart, BJ’s and Kohl’s all strive to come out on top in a critical fourth quarter, The Wall Street Journal reports.
Retailers, all of whom will have a significant sourcing advantage over small businesses, are all pushing for more merchandise after their inventories all suffered this year after fewer orders in the early months of the pandemic and supply chain safeguards which continued to bring empty shelves and higher prices due to inflation. The aggressive approach appears to be working, with stocks starting to recover from lows in nearly 30 years.
Walmart, for example, has rebounded by adopting tactics such as chartering their own ships to bypass bottlenecks that have occurred at other ocean shippers. A company spokesperson told the WSJ that inventories were down 4.6% in U.S. stores between the second quarters of 2021 and 2020, but consolidated inventories were up 16% year-over-year. previous year and 8% from the same quarter in 2019 during the quarter ending July 31. Inventories totaled nearly $ 47.8 billion.
Its biggest competitor, Target, saw its inventories rise nearly $ 11.3 billion in value in the last quarter, an increase of more than 26% from the same period a year ago.
While there is some risk in trying to increase inventory, the increased sales forecast for the holiday season, even with closures reinstated, outweighs the risk.
âI think the biggest risk is not having enough inventory rather than having too much,â said Rod Sides, head of retail and distribution practices for Deloitte LLP in the United States. âWe’re planning a much, much bigger holiday season. “
Of course, while the holiday season can give retailers a much needed increase in sales and potentially inventory, the effects of the COVID-19 pandemic continue to wreak havoc on the traditional holiday season. Not only have big box retailers like Target, Walmart, and Best Buy all announced plans to stay closed on Thanksgiving Day for the second year in a row, discounts aren’t expected to be as big as in previous years due to the bottleneck. ‘continued bottlenecks and restrictions on stocks.