Person filling out an inventory form with a pen

The retail game is changing as the holiday season rolls in, and retailers are flipping their inventory playbook. No more jam-packed warehouses or shelves spilling over with discounts just to lure in shoppers. Instead, big names like Walmart, Target, Best Buy, and Dick’s Sporting Goods are streamlining their stocks, focusing on what customers truly want.

Forecasting what shoppers want has been a rollercoaster ride during the pandemic. Consumers kept shifting their buying habits from home décor to office wear, then onto travel essentials. But now, retailers are saying goodbye to last year’s stockpile hangover. They’ve tidied up their shelves and balance sheets after spending the year working through the excess from before.

Target, for instance, slashed its inventory by 14% compared to last year, learning from the overstocking of pandemic-favorite items that lost their charm as people returned to normalcy. Chief Executive Brian Cornell emphasized staying cautious with inventory while staying open to new trends.

Flexibility in the supply chain is the name of the game post-pandemic. Retailers bulked up on orders, fearing shortages, but ended up with excess inventory. David Bassuk from AlixPartners highlighted the faster pace of changing consumer patterns, leaving retailers puzzled about managing goods effectively.

Even with the holidays around the corner, balancing inventory remains a challenge. Lauren Hobart, CEO of Dick’s Sporting Goods, stresses the importance of keeping inventory fresh to boost sales.

Holiday sales might not skyrocket this year. The National Retail Federation predicts a slower growth rate compared to last year due to consumer spending shifts towards services and inflation concerns.

Companies like Best Buy and Gap are also trimming inventory while focusing on aligning stock with customer demand. Best Buy’s CEO, Corie Barry, emphasized managing inventory strategically to match customer needs, even citing a boost in video game inventory this year.

Gap’s disciplined inventory approach has helped them avoid markdowns while swiftly responding to what customers want, like jumping on the trending color bandwagon.
However, finding the right inventory balance remains a puzzle. Vivek Astvansh from McGill University highlights the dilemma faced by retailers in stocking enough variety without overloading shelves.

Overall, retailers are tightening their inventory belts. Macy’s, for instance, saw improved margins by reducing inventory, focusing on variety, and steering away from redundancy.
The key takeaway? Retailers are learning to navigate this changing game, ensuring shelves are stocked with what shoppers truly desire rather than an endless array of choices.