As lead times extended further and further this year, retailers began ordering in earnest and earlier than normal.
Big name brands all reported a rise in inventories around Q3 more than the previous year:
- Target – 17.7%
- Walmart – 11.5%
- Home Depot – 27.4%
Aimed to guarantee product availability to their customers, this plan to overstock could have huge ramifications for retailers if it backfires.
Delays in the supply chain, like cargo ships stuck in main ports waiting to dock, have left many items stranded and unable to reach retailers.
Once the bottlenecks lessen, products will arrive too late for holiday sales.
Retailers will be left with few options: mark down items to sell for minimal profit or pack away merchandise for next year.
Discounted items, while making some form of profit, still lose retailers money.
Holding items until next season means spending money upfront to store them. However, the current demand for warehouse space is leaving companies scrambling to find storage.