Consumers are starting to shop like in 2019. What this means for your inventory strategy
Shoppers are no longer looking for sweatpants.
Major retailers, including Macy’s, Gap and Walmart, are dealing with excessive inventory of pandemic-era staples like casual wear and homewares, The Wall Street Journal reported. Ongoing supply chain strategies have led some retailers to historically place inventory orders early, which as consumer demand has shifted over time, has left them with excess merchandise of no interest. just not the buyers. Others faced a different supply challenge: orders were arriving late, making them useless for buyers.
Retailers are managing their oversupply in different ways: some are selling items at knockdown prices, some are selling merchandise to discount stores like TJ Maxx, and others are packing up inventory to sell at a more relevant later date.
Businesses have a lesson to learn from this shift in supply and demand: Consumers may be trying to put the pandemic behind them. A return to in-person work and an increase in live events and travel mean shoppers have different priorities for buying clothes, for example, while pricing pressures from inflation push shoppers to do less purchases. Small businesses have recently reported slowing sales of non-essential goods.
Reducing the supply may not be the right answer. Empty shelves, for example, can lead to missed sales, says Mark Cohen, director of retail studies at Columbia Business School. Instead, he says, businesses can be better suited by stocking shelves a bit more strategically — not investing too much in trending or seasonal products, and instead diversifying inventory.
After losing 60% of her business in 2020, New York-based fashion designer Tanya Taylor launched pajamas and swimwear but continued to produce the occasion-worthy designs her traditional customers want . Staying in close contact with customers through Instagram and other surveys has been key, she said. Inc. in January: “We get over 1,000 entries about people’s preferences for the next color of our best-selling dress and the hem length. So we’re learning a lot about the design, but also what their style looks like of life and what interests them.” The move, Taylor says, has been a boon to the brand’s customer loyalty.
Going forward, companies can anticipate inconsistent customer behavior to assess supply issues. And in the meantime, cutting prices – especially as recession approaches – is an option, albeit a less desirable one.