Box Stores Left Holding the Bag

Big chains brimming with inventory as demand eases

By Alan Wolf, YSN

Efforts by the nation’s largest retailers to stay in stock despite supply chain disruptions appear to have backfired.

According to a report in The Wall Street Journal, big chains like Target, Walmart, Kohl’s and Macy’s are now faced with a surplus of goods as rabid demand for certain consumer products has eased.

The report was based on U.S. Census Bureau data showing that the retailers’ ratio of inventory to sales has grown far beyond pre-pandemic levels, leaving stockpiles of unsold goods. In contrast, inventories at smaller retailers remain exceedingly lean by historical standards.

“When you step back and look at the overall picture, we’re not drowning in inventories relative to where overall sales are at,” said Jason Miller, an associate professor of logistics at Michigan State University’s Eli Broad College of Business.

Nikki Baird, a strategy VP at software firm Aptos, which works with Bed Bath & Beyond, Sephora and Adidas, said big retailers are feeling the impact of the “bullwhip effect,” in which merchants rush to fill inventory gaps by ordering larger-than-necessary orders only to see demand dissipate.

Indeed, historically high inventory levels combined with rampant inflation is what prompted Target CEO Brian Cornell to make the “tough decision” to cancel orders and institute aggressive markdowns, he recently told The Economic Club of New York. “We are in an environment many of us haven’t seen before,” he said.

BrandSource, a unit of YSN publisher AVB Inc., is a nationwide buying group for independent appliance, furniture, mattress and CE dealers.

Hat tip to The Wall Street Journal and Yahoo! Finance