Retailers Struggling to Keep Up with Shifting Consumer Desires

As shoppers are moving away from spending on casual clothing and home items that became staples during the height of the COVID-19 pandemic, some retailers are finding themselves overstocked with joggers, activewear, fleece and other goods they had expected shoppers to scoop up.

That means Gap, Macy’s and other retail chains are being forced to mark down the items they had anticipated would carry them to another profitable quarter as the spread of the coronavirus slows and more people feel comfortable shopping at brick-and-mortar locations again, even with inflation rising.

Macy’s has too many casual clothes, activewear, home textiles and tableware, CEO Jeff Gennette told The Wall Street Journal, as a shift toward dressier clothes for the office and social events that happened faster than they expected. The company will have to mark down its casual lines, eating into Q2 profits.

“It’s classic supply and demand,” Gennette said. “Too much supply, not enough demand.”

Inflation has shoppers prioritizing necessities such as food and gas and sees them booking trips, eating at restaurants and making entertainment-related plans rather than buying apparel and products for their homes, even as the supply chain is finally loosening up again, WSJ reported Monday (June 6).

“There was a lot of misforecasting in terms of how fast that shift would go back the other way,” Citi analyst Paul Lejuez told WSJ.

Walmart’s inventory was up about 33% in the first quarter, leading to more markdowns and less profits.

“It’s going to take this quarter and probably part of next, maybe a couple of quarters would be the best way to describe it, to get back to where we want to be,” Walmart U.S. chief John Furner said at the company’s annual investor meeting Friday (June 3).

Related: eCommerce Refashions Middle and Last Mile, and Real Estate, Too

Last week, The Wall Street Journal reported that warehouses may be in for some headwinds, in part because Amazon has been retooling its eCommerce operations, subleasing some of its 374 million square feet in warehouse space, possibly making the rental markets a bit more price-competitive while providing an additional revenue stream for the eCommerce giant.

Amazon has been expanding its logistics footprint, branching out into everything from planes to warehouse to enlisting Flex drivers to pick up the orders from mall-centered retail outlets and deliver those orders to consumers’ homes.