As consumer demand changes, Walmart and other US retail giants sell unsaleable goods

As consumer purchasing habits have changed significantly, some large retailers in the United States have decided to ease inventory pressure by clearing out inventory.

Inflation has led to major changes in consumer buying habits. Experts say that due to inflation, consumers are now more inclined to buy less discretionary items such as clothing and household goods , spend more on necessities such as food and energy, and choose to shop at cheaper stores. A recent industry intelligence report from Morning Consult stated: "Many consumers are seeking cheaper options on daily necessities such as gas and groceries, while others are delaying purchases altogether, especially big-ticket items . "

During the pandemic, consumption rebounded, and a large number of retailers were unable to meet demand due to supply chain problems. As a result, many retailers' forecasts deviated and they misjudged consumer demand for popular goods in 2022. In order to prevent problems with the supply chain from recurring, retailers accelerated purchases to increase sales and stockpiled inventory, resulting in a large backlog of non-essential goods , which affected revenue in the second quarter.

In order to reduce losses and fight inflation, US retailers are using a variety of strategies to reduce inventory levels, including drastic price cuts . Walmart is one of them, and it has been forced to make large discounts on some of its inventory. Walmart Chief Financial Officer Rainey said : "We have cleared most of the summer seasonal inventory, but we are still focused on reducing exposure to other areas such as electronics, home and sporting goods. We have also canceled billions of dollars in orders to help align inventory levels with expected demand . " The situation is even more grim for retail giant Target , whose inventory has increased by 36% over last year. Due to the liquidation of excess inventory, its net income plummeted, and its operating profit margin fell from 9.8% to 1.2%. Second-quarter earnings fell 89.9% from the same period last year to $183 million.

Discounts have hurt retailers' profits, but overstocking is nothing new for retail companies, and some are beginning to see the light at the end of the tunnel. Target said that while the situation is still very unfavorable compared to pre-pandemic years, there are early signs that costs and volatility may have peaked. Customer surveys give them hope for the rest of 2022. Target said: " When we talked to surveyed consumers, we found that customers are looking forward to holidays such as Thanksgiving and Christmas , so this makes us very optimistic about our performance during these key holidays. " Walmart also said: "Our fall and holiday products look great. There are a lot of fresh products , and we are in a strong position to open price points across categories. "

Retail giant

Slow-moving goods