Shoppers, welcome to the good side of supply chain disruptions.
Finally, inventory woes have flipped to consumers’ advantage. Clothing and accessories, home goods and furniture are plentiful again, leading to discounts earlier in the spring and summer season.
Retailers that have been navigating supply chain issues for more than two years now have a new problem: They have too much inventory just as Americans are becoming more skittish about making major purchases.
Nothing seems to match up nicely in this economy. NPD Group said Thursday that consumer demand in May and June has become less predictable than what retailers and manufacturers became accustomed to during the first two years of the pandemic, and now 83% of consumers say they’re planning spending changes.
Consumer sentiment has been declining with rising inflation, and, according to The University of Michigan monthly survey, inflation is dampening consumers’ decisions to purchase durable goods and big-ticket items such as appliances, electronics and furniture.
“As higher prices become harder to avoid, consumers may feel no choice but to adjust their spending patterns, whether through substitution of goods or forgoing purchases altogether,” said Joanne Hsu, chief economist for the University of Michigan survey of consumers.
Retailers are trying their best to entice folks on the fence.
Home Depot is discounting kitchen and laundry appliances by 25% up to $750 off select products.
Weir’s Furniture Village is having an “Inventory Overstock Sale” and is bringing back its semi-annual sales later this year for the first time in 2.5 years, said Dirk Smith, senior vice president of operations at Weir’s, a family-owned and -operated retailer with four local stores.
Sunnyland Outdoor Living didn’t hold any sales promotions in 2021 “because we couldn’t keep merchandise in stock,” said Brad Schweig, vice president of operations. Now the local retailer with stores in Dallas and Frisco has a full warehouse. It’s discounting earlier than normal to make room for new goods scheduled to arrive in the fall and early winter.
Likewise at Nebraska Furniture Mart. “We are in a stronger in-stock inventory position than this time last year,” said Andy Shefsky, spokesman for NFM, adding that the company is getting more goods in this summer.
Last year, retailers of all sizes, from Walmart and Target to small boutiques, took delivery of more goods to hedge against having empty shelves. That lasted through the beginning of this year, and by then pandemic shopping trends had changed some. Overseas factories reopened and were ready to fill orders, but demand had slowed.
“We’re seeing discounts I wouldn’t expect this time of year,” said Julie Ramhold, who tracks discounts as a consumer analyst at Dealnews. The volume of deals isn’t at pre-pandemic levels yet, but discount offers are back after a noticeable hiatus last year, she said. Wayfair’s 70% off Memorial Day sale applied to way more items than last year, she said.
The stay-at-home lifestyle made everything from Adirondack chairs to anything water sport-related such as stand-up paddleboards hard to find in 2020 and 2021. Paddleboards are not only in stock now but were broadly discounted at Scheels in The Colony and featured Tuesday on Amazon’s Treasure Truck.
“We have a ton of paddleboard options — inflatables, rigid, all price points, colors and all the accessories like paddles and life jackets that we couldn’t keep in stock last year,” said Ian Jagodzinski, manager of Scheels’ camping and outdoor department. The goods started coming in in February and March and are still arriving, he said.
Walmart has discounted some swimwear 40% and Target has a buy one get one free offer for swimsuits, “which is something you might see after Labor Day but not the day after the official start of summer,” Ramhold said.
Apparel specialty retailers such as J. Crew and Talbots are layering discounts on already reduced items, and American Eagle Outfitters said all jeans and shorts are 50% off.
J.C. Penney chief merchandising officer Michelle Wlazlo said the retailer is heading into the back-to-school season with on-time deliveries of fashion, uniforms, basic apparel and campus bedding and accessories. That’s been the case since spring after the Plano-based retailer moved up design and production timelines, she said, and Penney has resumed its regular seasonal markdowns and discounts.
Most consider back-to-school shopping the necessary kind of spending, and it’s one of the categories where consumers are still spending, according to NPD Group, a market research firm.
Retailers should brace for more competition for consumers’ dollars from things like summer vacations, concerts, sporting events and other service-based spending, said Marshal Cohen, chief retail industry adviser for NPD.
Higher gas prices and airfares have been mentioned by some customers who are looking for ways “to create a staycation in their own backyards,” Sunnyland’s Schweig said.
Even though late shipments are still coming in, manufacturers are asking retailers to book orders now for spring 2023, he said.
People in the furniture business are calling it the “catch-up effect” of factories reopening and inventory all showing up now, Smith said. “We don’t want to leave our manufacturing partners with a lot of raw materials.”
Weir’s had a record year in 2021 by keeping bestsellers in stock and continuing to order during the pandemic, he said. “We knew at the end of this, we would still be standing.”