The Covid-related shipping backlogs caused a mismatch in what arrived at warehouses and what consumers want to spend money on right now. Part of the problem is seasonal mismatch and the shift of consumers from goods to services spending as we all move out of lockdown into normal life. Part of the problem is inflation, which forces consumers to spend more on housing and energy and less on discretionary spending. Part of the problem is due to an incredible amount of returns.
The scale of the inventory build-up is truly jaw-dropping. Retailers have to move out this old inventory to make room for new seasonal inventory.
**Retail’s ‘Dark Side’: As Inventory Piles Up, Liquidation Warehouses Are Busy**
**Consumers are buying fewer discretionary goods and returning more. To clear their shelves, retailers are selling to liquidators at steep discounts.**
**By Michael Corkery, The New York Times, July 30, 2022**
**... In a giant warehouse in northeastern Pennsylvania, there are shiny new Huffys and Schwinns available at big discounts. The same goes for patio furniture, garden hoses and portable pizza ovens. There are home spas, Rachael Ray’s nonstick pans and a backyard firepit, which promises to make “memories every day.” The warehouse is run by Liquidity Services, a company that collects surplus and returned goods from major retailers like Target and Amazon and resells them, often for cents on the dollar. ...**
**In 2021, shoppers returned an average of 16.6 percent of their purchases, up from 10.6 percent in 2020 and more than double the rate in 2019, according to an analysis by the National Retail Federation, a trade group, and Appriss Retail, a software and analytics firm.**
**Last year’s returns, which retailers are not always able to resell themselves, totaled $761 billion in lost sales. That, the retail federation noted, is more than the annual budget for the U.S. Department of Defense. ...** [end quote]
Gasp! That is truly jaw-dropping! And that’s only returns. It doesn’t include the inventory buildup caused by the supply-chain delays.
I shudder to think about the incredible amount of loss and waste. Retailers are suffering serious blows. Amazon, Walmart, Target … all the retailers … are losing share value because of this.
As a consumer, I wish that I could access some of this discounted inventory. The warehouse described in the article is only accessible to locals.
I bought an Amazon Fire TV Omni on Prime Day which was discounted from $405 to $245.