Under supply chain pressure, US retailers no longer offer post-holiday discounts

It is understood that January is the golden month for discounts in the US retail industry , during which most retailers will offer discounts of 75% to 80% to promote sales and clear out remaining holiday merchandise such as coats, sweaters, shoes, gadgets and pajama sets .

Meanwhile, data from the National Retail Federation shows that as many as 68% of consumers shop in the week after Christmas in the hope of getting post-holiday discounts.

However, due to supply chain congestion this year, many products have not arrived at warehouses before the holiday, and retailers are facing inventory shortages. Coupled with consumers' strong shopping desire, some retailers are currently signaling that they may not adopt a discount clearance strategy for products that cannot be sold before the New Year , but instead pack and store them for sale next year.

Gap Inc. (GPS) , which operates Gap, Old Navy, Banana Republic and Athleta stores, which are often anchors for clearance sales, said supply chain stagnation due to Covid-related factory closures and port backlogs cost it $300 million in sales heading into the holiday season. Worse , the retailer said it will continue to face inventory shortages throughout the holiday shopping season .

"If we believe merchandise is arriving in our warehouses late in the holiday shopping season , we will no longer place it in our stores or online for clearance, but instead we will hold it until next year to sell at regular price , " Gap Inc. Chief Financial Officer Katrina O'Connell said on a recent conference call.

The head of Victoria's Secret said in a recent earnings call : " Due to supply chain issues , the arrival of nearly 50% of its holiday product inventory was delayed , including many pajama sets, robes and slippers that did not arrive in stores before Christmas. But consumers should not expect these items to be cleared directly in January . "

Michael Brown, a partner in the consumer practice at strategy and management consulting firm Kearney , said retailers will stick with deep discounts now and after Christmas as long as possible because consumers have already shopped early, but for items they really want, consumers don't mind discounts.

" The demand is there right now, " Brown said , so retailers are looking to increase margins on products because of strong demand and lack of supply .

USA

Supply Chain

Discount products