TJ Maxx, Burlington to offer shoppers large savings

• People’s preferences and purchasing habits have changed, leaving retailers with excess inventory.
• Discount retailers rely on closeouts, overstocks and out-of-season merchandise to fill their shelves.
• Volume of products in the overstock market has increased by about 40% since June 2019 levels.

Massive amounts of long-delayed orders for things that were popular in the early days of the pandemic are pouring in, but people’ preferences and purchasing habits have shifted, leaving big retail chains with mounds of excess inventory.

As people resume the experiences they put on hold during the coronavirus outbreak, travel arrangements and restaurant meals have taken the place of casual clothing and outdoor furniture. Target, Walmart, Macy’s and other retailers have been lowering prices on hundreds of items in stores and selling stuff in bulk before it leaves the warehouse, frequently at significant losses, to clear store shelves of surplus stock.

However, such losses could result in significant gains for off-price shops like TJ Maxx, Marshalls, and Ross as more shoppers cut back on their spending in response to rising gas, food, and other prices and turn to discounters for deals.

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According to Brett Rose, CEO of United National Consumer Suppliers, a wholesale distributor that buys discounted and excess products from manufacturers and resells them to retailers, “I don’t think any store could have anticipated [for] this extreme sort of cliff and how it was going to unfold.”

They have a tonne of merchandise that just arrived but nobody is buying it.

When compared to the same period last year, Macy’s, Target, Walmart, and other major retailers reported that inventory levels rose anywhere between 17 and 45 percent during the first quarter.

According to John Furner, the CEO and president of Walmart U.S., “there’s probably 20% of [stuff] that, if you could just wish away and make it disappear, you would,” he said to analysts this month. Short of that, Walmart reduced the cost of more than 10,000 items, including furniture, sporting goods, and kitchenware. To get inventory out of stores and distribution centres, Target and Best Buy likewise reduced the prices of more merchandise.

Full-price stores must quickly get rid of underperforming items due to limited shelf and storage space and shipments of new goods arriving every other week, according to Lorraine Hutchinson, a retail analyst at Bank of America.

They don’t want the clearance to reduce the demand for such fresh products at full price, she explained. They would rather accept the penalty, move the product through a route where it couldn’t be compared to their full-price offerings, and make the greatest use of the new, fresh product that was about to arrive.

This pathway, or pipeline, frequently connects to discount retailers or wholesalers, like Rose, who resell excess products to retailers who rely on closeouts, overstocks, and out-of-season merchandise to fill their shelves. According to Rose, the volume of products in the overstock market has increased by about 40% since June 2019 levels. In addition, he noted that brokers and off-price merchants are purchasing “more of more” due to the steep discounts and the variety of products offered. They are doing this in an effort to capitalise on the rising demand for bargains as consumers attempt to stretch their purchasing power.

Burlington Stores CEO Michael O’Sullivan informed analysts last month that the firm has been stockpiling merchandise in preparation for a spike in discount consumers in the late summer and early fall by taking advantage of inexpensive closeout sales. He remarked, “The atmosphere for purchases is better now than it has been in years. If [it] continues, we would anticipate that our selection will be more attractive and offer even better prices.

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