In order to reduce their inventories, Target is planning to cut prices on many of the items they wish to get rid of. Additionally, rising inflation has forced households to reallocate budget items to make sure they can cover their necessities. Instead of board games and televisions, consumers are opting to seek entertainment outside of their homes by going to restaurants and traveling. Rather than purchasing fleece hoodies and pajamas, consumers are purchasing sundresses and swimsuits. As the world recovers from the pandemic and people begin leaving their homes again, the items they are purchasing are changing. Other retailers, such as Walmart, and clothing stores, such as The Gap and Abercrombie & Fitch are seeing similar increases in inventories. The increase in inventory is a result of a combination of easing supply chain backups and changes in consumer preferences. At the end of April, the company had $15.1 billion in inventory, which is 43% higher than a year earlier.
Retail giant Target has announced plans to reduce an excess stock of inventory.
its original price ‘original’ defined as its price when it first entered the dataset.Inventory, Opportunity Costs, Supply and Demand Photo by Abhinav Bhardwaj on Unsplash The calculation measures the percent change between the current price vs. Notes: *Total % Merchandise Discount measures the overall level of discounting across the merchandise (including both full-price items and on-sale items). We will continue to monitor how the convergence of inflation and inventory trends manifest for Target and other consumer brands within our Retail Pricing dataset. It is therefore curious if Target will also choose to add further Electronics markdowns amid its current inventory woes. On the other hand, Electronics (not mentioned in the press release) has always had the highest discounting, and at a relatively steady 12% rate over the past three years. Further, discounting trends within Home have also been steadily decreasing over the last 3 years, from a high of 15% in 2019 to now 3% in May ‘22 thus, any strategy to increase Home markdowns would indeed also serve as a dramatic trend-reversal. Looking at the data by category reveals that discounting levels were always low within Food and Household Essentials, and actually turned negative-with Food showing the sharpest drop-since the beginning of the year. with more discretionary categories like Home. The press release suggested less right-sizing among frequently shopped for categories like Food and Household Essentials vs. Therefore, it seems likely that any discounting measures Target rolls out now would serve as a three-year trend-reversal and a correction back to “normal” (ie: non-inflationary) past rates-to the extent that is possible amid their own rising costs of goods and supplies.īreaking down discounting by categories paints a more nuanced picture, however. The total percentage of all merchandise discounted* was at 3% as of May ‘22, compared to 7% a year ago and 12% in the fall of 2019. Using Earnest’s Retail Pricing data, we found that discounting at Target has already been at depressed levels (no doubt caused at least partially by inflationary pressures). This is the latest in an effort to correct the mismatch between supply and demand- a wider issue currently affecting many other large consumer clothing brands. Amid ongoing inventory issues, including a rise in out-of-stock SKUs, Target announced it would be right-sizing its inventory by implementing additional markdowns, removing excess inventory, and canceling orders.
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