The retail giant said on Tuesday it would cut prices on some more expensive items that consumers have taken away from purchase and cancel backorders from suppliers.
That’s a sharp reversal from most of the past two years, when discounts were scarce and supply constraints often prevented consumers from finding what they wanted.
Stores and brands were able to sell goods at full price to consumers who had accumulated savings while staying at home during the pandemic. They were eager to spend big on their homes and cabinets.
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But many shoppers in recent months have changed their buying choices in response to the fastest jump in inflation in decades and the end of pandemic stimulus payments from the federal government.
Consumers are making fewer high-end purchases and buying more basic necessities like food, household basics and self-care items.
“There is a need to reduce inventory — even if that means discounts — to rebalance inventory levels and make more room” for these high-demand categories, GlobalData Retail analyst Neil Saunders said in a note to clients on Tuesday. . .
Target was caught off guard by the speed of these changing trends and last month announced to investors that it would begin marking some overstocked items.
On Tuesday, the company said it needed to respond more aggressively.
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The measures will affect the retailer’s profit estimates for the year, the company said.
On Tuesday, Target shares were down 31% for the year and shares fell 2% in early trading after the unexpected announcement.
Other retailers, including Walmart, Gap and Urban Outfitters, also said they held too much inventory of certain product lines and also planned to lower prices and increase sales to eliminate the glut.
“There is excess inventory … in all areas of retail right now,” Urban Outfitters CEO Richard Hayne said last month.
Urban Outfitters will increase promotions for the rest of the year and during the winter holiday shopping season, he said.
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