Consumers Are Starting to Shop Like It’s 2019. What That Means for Your Inventory Strategy

Shoppers aren’t looking for sweatpants anymore.

Large retailers, including Macy’s, Gap, and Walmart, are dealing with excessive inventory of pandemic-era hot-ticket items like casual clothing and home goods, The Wall Street Journal reported. Ongoing supply chain strategies led some retailers to place inventory orders historically early–which, as consumer demand changed over time, left them with an excess of goods that shoppers simply weren’t interested in. Others faced a different supply challenge: Seasonal-specific orders arrived late, making them irrelevant to shoppers.

Retailers are dealing with their excess supply in different ways: Some are price-slashing items, some are selling goods to discount stores like T.J. Maxx, and others are packing inventory for sale at a later, more relevant date.

There’s a lesson for businesses to take away from this supply-demand shift: Consumers may be trying to put the pandemic behind them. A return to in-person work and an increase in live events and travel means shoppers have different clothing purchase priorities, for instance, while the price pressures of inflation are pushing shoppers to make fewer purchases. Small businesses recently reported seeing sales of non-essential goods slow down.

Pulling back on supply may not be the right answer. Empty shelves, for instance, can add up to missed sales, says Mark Cohen, director of retail studies at Columbia Business School. Instead, he says, businesses may be best suited by stocking shelves a little more strategically–not overly investing in trending or seasonal goods, and instead diversifying inventory. 

After losing 60 percent of her business in 2020, the New York City-based fashion designer Tanya Taylor launched pajamas and swimwear, but continued producing the occasion-worthy designs that her traditional customers want. Keeping in close touch with customers through Instagram polls and the like has been key, she told Inc. in January: “We get over 1,000 entries of people’s preferences on what color of our best-selling dress they want next and what hem length. So we learn a lot about design, but also what their lifestyle looks like and what they care about.” This initiative, Taylor says, has been a boon to the brand’s customer loyalty.