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Major retailers are facing unexpected oversupply. : NPR

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The deep fryer is waiting for its customer at the Kroger store in Kentucky in 2020, when the kitchen appliance became a bestseller.

Scotty Perry/Bloomberg via Getty Images


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Scotty Perry/Bloomberg via Getty Images


The deep fryer is waiting for its customer at the Kroger store in Kentucky in 2020, when the kitchen appliance became a bestseller.

Scotty Perry/Bloomberg via Getty Images

After two years of the pandemic when she stocked up on things – a desk, a chair, a bookshelf, dresses, a blender, knives – Rachel Premack is now completely traveling and saving everything she can. She had stimulus dollars last year and had nowhere to go; now she has weddings and family visits and worries about rising prices.

This nationwide has become a recipe for an entirely new problem for some US stores: overstocking.

“It’s a really bizarre situation,” says Premak, who has been following the whole thing as editor-in-chief of logistics company FreightWaves. “Inventory managers at large large stores don’t even know how to navigate what is happening anymore, they are simply exhausted.”

Large stores such as Target and Walmart are particularly affected by an oversupply of certain items.

Target specifically named televisions, kitchen appliances, outdoor furniture, electronics and fitness products, and the CEO said the chain did not expect the “magnitude” of the cost shift from goods to services. Some clothing stores, like Gap, have also been stuck with too many hoodies and sportswear as office workers have quickly returned to suits and dresses.

“If you think about it [stores are] ordering three, six and even nine months in advance,” said Mark Matthews, vice president of industry research and analysis at the National Retail Federation. — Retailers base their forecasts on historical behavior. But there is no template for consumer behavior after the pandemic.”

This year’s hot retail term is the whip effect.

He describes how retailers, their suppliers and manufacturers can exaggerate a drop or surge in demand. Take, dear pandemic, the deep fryer. When demand suddenly picks up, stores rush to avoid empty shelves, ordering a few extra items just in case. Their suppliers also order add-ons from factories that also make more add-ons, until all of a sudden there are too many deep fryers because people kind of stopped buying them.

What does it mean now? Shoppers may see sales on some items, such as storage baskets or chairs, especially at larger stores. More items will go to liquidators and discount stores. But it also means another chaotic year for vendors like Curtis McGill of Texas-based toy company Hey Buddy Hey Pal.

The other day, a major retailer completely dropped its commitment to buy one of McGill’s best-selling kits. The big toy show also produced fewer orders, by more than a third, he said. Stores are wary of future demand, partly because of the uncertainty of inflation, but partly because their money is tied to storing and sorting excess inventory.

“It can be said that over the past 12 months in the toy business [period] it wasn’t as fun as it should be,” McGill said.

The shopping craze has slowed down, but it hasn’t ended.

In the next few weeks, new data will show how long this oversupply can last, said Jason Miller, who tracks retail stocks and sales at Michigan State University. Initial data suggests that retailers with bloated inventories are already starting to get the situation under control.

Still, importers continue to bring near-record high volumes of goods into the US, he said. That’s because, Miller said, even though the shopping frenzy slowed down last year, people are still buying more groceries than they did before the pandemic.

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