The overstuffed inventories in retailer warehouses are reaching sales floors in the form of extensive and very early holiday sales. The Wall Street Journal reports that retailers are dangling big sales well ahead of Black Friday, in a sharp reversal from a period in which scarcity allowed stores to charge full price for many products.
Stores have solved those supply chain problems and then some, and the result could be thinner profit margins, particularly for apparel retailers who are under acute pressure to lower prices.
The factory closures, shipping delays and other supply-chain problems that kept goods in scarce supply over the past two years helped retailers break a cycle of overbuying and discounting that had eroded profits for decades. But the interlude was short lived.
Of 150 U.S. retail executives polled in September by Accenture, more than a third said their companies are using deep discounts to unload excess stock.
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