Why Shelves Might be Emptier This Holiday Season
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Last year, retailers went wild stocking warehouses, and shelves in the hopes of capitalizing fully on the first post-pandemic holiday season. This year, they’re shaking things up again, by doing quite the opposite.Retail giants like Walmart (WMT) and Target (TGT) are taking a more calculated approach to their warehouses, shifting focus from abundance to relevance.
Changing Consumer Behavior
The pandemic has left its mark on consumer behavior. While spending has remained surprisingly resilities, buying behavior has in some instances become more erratic, and harder for companies to forecast.
The overall inventory-to-sales ratio is tighter than usual this year, reflecting a strategic shift toward supply chain flexibility. Rather than stockpiling, retailers are slimming down their logistics, stocking only what they know will sell.
Retail’s Responsive Edge
After a challenging 2022 forced retailers to cut prices and offload inventory, this year’s shift may be part of a broader strategic overhaul to avoid excess, and align better with consumer preferences.
Macy’s (M) has seen improved gross margins by changing its inventory strategy. Meanwhile, Best Buy (BBY) and Gap (GPS) have both closely followed consumer trends to determine what items to stock, helping them reduce inventory and avoid markdowns.
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