Many retailers have more stock than they need. (Getty images)
After supply chain issues during the pandemic caused widespread shortages, some retailers now find themselves with the opposite problem: excess inventory. With 21 percent more inventory than they had a year ago (equaling a whopping $732 billion), many retailers are worried their profit margins are about to take a hit.
Part of the problem has to do with a shift in what consumers are buying as the pandemic eases its grip. People are opting to spend on travel instead of sweatpants and new kitchen appliances. In addition, eliminating excess inventory means offering items to consumers at deeply discounted prices. However, with inflation concerns, even that won't guarantee a sale. As consumers pay higher prices for essentials like gas and groceries, they have less money available for discretionary purchases and holiday gifts.
The problems facing retailers are complex, and it may take them some time to work out the kinks. In the meantime, this could be good news for consumers looking to score a deal on items this holiday season.
How shoppers can take advantage of inventory surplus
- Find out what chains have surplus inventory. Walmart, Target, Kohl's, and Gap are just a few big box stores that reported surplus inventory this year. These are a few good places to start shopping, as you can expect to see plenty of discounts storewide.
- Don't wait for Black Friday. With so much excess inventory, many retailers started their Thanksgiving sales early and planned to continue through the week.
- Research what inventory is overstocked. Most stores are dealing with a surplus of a variety of items, including electronics, home furniture, appliances, toys, and apparel. This is good news for anyone needing a new computer or winter coat, or anyone with a long holiday gift list. Keep your eyes peeled for deals in these and other categories.
- If you see a good deal on an item you need, don't wait. Retailers are still struggling to find the balance between excess items and shortages. Just because something is in stock now doesn't mean it will stay that way. Therefore, if you are shopping for something and find a good deal, buy it.
- Be willing to search for the best deals. Overstocked shelves and clothes racks can be challenging to sort through, but you might have to work to find the best deals. Hit the store mentally prepared to spend a little extra time searching.
- Be alert to good deals at stores you frequent. It's easier to spot a good deal at a store where you know what normal prices look like. Don't forget to check online or on a store's app for special "online only" deals.
- Check out smaller businesses too. Big box stores aren't the only retailers dealing with overstock issues. Many small businesses are struggling with the same problems. Purchasing from a smaller retailer could help them stay in business.
- Watch your budget. It can be tempting to buy something just because it's a great deal, but that isn't necessarily a wise financial move. Don't go over budget for an item you don't really need – even if it is on sale.
For more information
Read more about budgeting for the holidays and review the BBB Tip: Shop safe, shop smart this holiday season. Read all of BBB's tips for a great holiday season.
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