Retailers Face Q1 Inventory Glut As Late Cargos Keep Coming

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We’re about halfway through retail’s make-or-break season and thus far consumers — despite the sudden, horrific spike in the cost of nearly every basic — are in the spending mood. US retail sales grew for three consecutive months through October, according to the latest report by US Census Bureau, Important: The estimates for the current quarter have projected expenditure growth of over 5 per cent.

“The consumer is in a very good position, and the consumer’s willingness to spend is very high,” said Brian Yarbrough, an analyst at Edwards Jones. Businesshala,

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With shortage of goods, added by overdue cargo, retailers are enjoying a period of pleasant imbalance between supply and demand. Turnover is fast. kohlso
For example, reported third-quarter revenue of $4.6 billion, up 15.6 percent, up 15.6 percent year over year.

The retail industry’s profit margin is projected to hit a record high this year, at over 13 per cent. Famous financial analyst Ed Yardney recently said baron’s This number proves that “cost pressures are not shrinking margins.”

But a month from now, the situation will start changing and the picture that will emerge may be bleak.

Those thousands of containers still stuck in closed supply chains, stuffed with seasonal goods that were supposed to arrive in time for the 2021 season? They are about to appear. Then what?

For example, Victoria’s Secret — while Reporting Third-quarter growth of 22 percent for in-store sales — also pointed out that nearly half of the company’s falling merchandise hasn’t arrived yet.

According to the industry news site retail dive, CEO Martin Waters told analysts that 90 million of the 200 million units ordered are in balance, including large swaths in core gift categories like sleepwear.

You can’t just send the container back. If one assumes that this is happening across the industry, the next quarter or two is likely to see huge discounts and quarterly reports drowning in red ink.

Meanwhile, the mood of the consumers is in the tank. NS The University of Michigan recently reported Consumer confidence weakened by inflation dips to 10-year low. Depending on the state of the economy in the early months of 2022, the inflationary growth we are experiencing could be quickly followed by a deflationary slowdown.

How to deal with the prospect of wildly volatile pricing?

As an advocate for customer-focused research, pricing feedback is essential. While most companies claim to prioritize pricing research, 85 percent believe they have “significant room for improvement.” Bain & Company report,

“With significant margins at stake, companies cannot afford to continue pricing by guesswork or rules of thumb.” Bain said that the top-performing companies “price on the transaction (read ‘customer’) level of pricing.”

Another key element is the customer experience, which includes everything from ease of purchase and purchase to consistency. For example, in the research we did for denim labels, we learned that consumers were put off by the fact that the company’s jeans had 14 different tags that they had to remove. Today the same pair has only three tags.

Customer preferences regarding products and brands are critical to the process of designing and developing merchandise, and pricing research is how you maximize margins. But in the end, it all comes down to the heading of customer experience.

Consumers may forget what they paid for an item, but they will remember and often share how a particular retailer or brand made them feel.

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