retail sales in August

U.S. Retailers Fine-Tune Inventory Strategies for Holiday Season, Echoing Pre-Pandemic Norms

Retailers Fine-Tune Inventory Strategies for Holiday Season
As the holiday season approaches, retailers in the United States are gearing up for a year that mirrors pre-pandemic trends. Consumer behavior is normalizing, and this shift is prompting retailers to adjust their inventory strategies to meet demands. In 2020, there was a surge in consumer spending on goods during the early COVID-19 lockdowns, but patterns have now steadied.

According to a recent report by Descartes Systems Group, U.S. ocean container import growth over the first nine months of this year was within 2.5% of the same period in 2019, emphasizing that retailers are importing at a pace akin to pre-pandemic times. This reflects the resilience of consumer spending, holding up better than expected despite factors like inflation on essential grocery items, higher fuel costs, and more expensive loans and mortgages.

Deloitte has predicted holiday sales growth to be in the range of 3.5-4.6% for the period of November to January. Although this represents the slowest growth rate since 2018, it aligns with the cautious approach retailers are taking. The increase in September coffee volume by 8% compared to the 0.3% rise in August suggests that retailers are importing goods based on subtle consumer signals, a departure from the rushed influx of products seen in mid-2022.

During that time, as pandemic restrictions eased, retailers faced challenges of excess inventory as consumer spending shifted towards dining out, travel, and entertainment. Learning from that experience, major U.S. retailers like Walmart, Target, Home Depot, and Lowe’s—some of the largest importers of goods via ocean container ships—are reverting to “just-in-time” inventory strategies.

“The consumer seems to be pretty fickle these days,” remarked Descartes Executive Vice President Chris Jones. This sentiment is echoed by Jonathan Gold, Vice President for Supply Chain for the National Retail Federation (NRF), emphasizing that retailers are meticulously implementing strategies to balance supply and demand, considering the slower growth compared to the past couple of years.

With the holiday season on the horizon, retailers are strategically importing goods and supplies, ensuring they are prepared for potential shifts in consumer demand. The goal is to strike the right balance, importing enough to meet consumer needs without ending up with surplus inventory. Adapting inventory strategies in response to consumer behavior is essential, ensuring retailers navigate this crucial period successfully and meet consumer expectations effectively. The watchword for this holiday season is undoubtedly ‘balance,’ and retailers are aligning their strategies to strike it just right.

Story: Retailers Fine-Tune Inventory Strategies for Holiday Season
Source: Reuters

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