Retailers are still hoping to get rid of their excess inventory this holiday season

Retailers like Walmart, Target, Gap and Kohl's will be looking to get rid of as much inventory as possible during the peak December sales season.

Photo: Justin Sullivan/Getty Images

Large retailers in the United States have one last chance to slim down your inventories bulky and start from scratch in 2023, with a better projection to help them in what seems to be a difficult year for the economy and for consumers.

Earnings reports for the past few weeks, with positive signs that buyers are encouraged to open the wallets in the upcoming Christmas season, they give good signals to investors.

However, much less attractive data than profits and revenues is in the sights of markets that measure through inventory reports, how far retail stores have progressed to get rid of excess products that they had in their warehouses and back rooms.

In this process, large retailers such as Walmart, Target, Gap and Kohl's parade, which add up to months looking to sell the products that began to accumulate in their warehouses since the end of the first quarter of the year, when buyers began to change their consumption habits after the pandemic.

Why is it important to clean warehouses?

The data on the level of inventory is not minor, because although some analysts consider that the response to a possible recession would be hidden in the warehouses full of products in the off-season, to others it will show how much retailers will have to sacrifice to get rid of all of that in peak sales season.

Based on the level of inventory that retailers enter the Christmas peak season with, investors have the ability to calculate How far should retailers take their discounts? to move the merchandise you have stored.

Michael Baker, retail analyst at the equity research firm DA Davidson, highlighted the importance that the level of inventory will have for this year-end season in calculating the future of retailers in the country.

“Usually that's not the case, usually it's just a factor. Inventory will have more meaning than the other metrics”, he indicated in a report for CNBC.

While excess inventory means nothing more to consumers than higher discounts, the higher the rebates, the the lower the profit margin for retailers.

However, on this board, consumers could have the last word and be much more selective with the purchases they will make during the peak Christmas season.

For Neil Saunders, managing director of GlobalData Retail, shoppers are more likely to be reluctant to buy clothing, household items and electronicsmerchandise that was widely requested in previous months.

But not only that, the specialist warned that not all buyers appreciate aisles and shelves overflowing with products, as seek agility, comfort and tranquility in a shopping season that is warned to be chaotic.

This could give a new opportunity to digital marketssuch as Amazon, which have also been hit by the return of consumers to physical stores, but which, given the chaos in the aisles in shopping centers, would be an alternative for buyers.

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