Pandemic supply chain issues resulted in factories shutting down, which led to shortages at all the well-known supermarkets and other stores. With things back up and running again for the second summer after the initial start of COVID-19, some retailers are seeing the opposite of a low supply, and it is actually great for shoppers. Two of the largest chains are looking to get rid of the excess supply and they are doing so in the form of price cuts and sales.
Company leaders for both Target and Walmart have recently discussed their issue. Target announced on June 7 that it will be taking steps to downsize inventory, which will include additional markdowns – some on already heavily discounted clearance rack items. During the retailer's May earnings report, Target revealed it took a massive sales hit, which has led to it taking immediate action on reevaluating its inventory. The company will now focus on the essential categories that customers are shopping for right now – including groceries, beauty, household, and back-to-school. (This is great for anyone who shops for food at Target. In fact, here are The Best Healthy Foods to Buy at Target, Dietitians Say.)
"We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment," CEO Brian Cornell said in an interview with CNBC.
Similarly, Walmart has been faced with an overabundance of merchandise. During the company's earnings call on May 17 company leaders discussed what to do with the inventory. Executive Vice President and Chief Financial Officer Brett Biggs stated that Walmart is currently in a "short period of rightsizing it."
This allows the company to continue focusing on positioning itself as a value-driven destination for customers. In the same earnings call John Furner, the President and CEO of Walmart U.S. said that right now there are over 10,000 rollbacks in place and an increased volume of discounts would continue amid inflationary pressures throughout the Summer.
"We'll control what we can control, reduce our inventory level and keep prices as low as we can, especially on opening price point food items while improving our profit performance," said Doug McMillon, the President and CEO of Walmart on the call.
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