As inflation continues to soar, many American consumers are feeling the effects of price hikes during their trips to grocery stores or shopping malls. But a popular TikTok account says one major retailer is slashing prices amid an “oversupply season.”
The video from Morning Brew, which has garnered more than 140,000 views on TikTok, claims Target shoppers are seeing sales as the company tries to move excess inventory that isn’t selling.
Is Target discounting some items due to excess inventory?
- Target Corporation
- Mark Matthews, vice president of research development and industry analysis at the National Retail Federation
Yes, Target is discounting some items due to excess inventory.
WHAT WE FOUND
When the COVID-19 pandemic began in 2020, retail shoppers at stores like Target were buying more home items and casual activewear, Mark Matthews with the National Retail Federation told VERIFY. But demand has shifted as more workers head back into the office and consumers stick to more essential items amid soaring prices.
“Retailers just didn't recognize that demand was going to fade, so they ordered at previous levels, and now they have a bit of excess inventory,” Matthews said.
Target leadership told investors during an earnings call in May that its shelves were overstocked in the wrong areas during the first part of 2022. The company saw growth in sales of food and beverage items – along with other essentials – and beauty, and a decline in spending on apparel and home items, Target Chairman and CEO Brian Cornell said during the call.
“While we anticipated a post-stimulus slowdown in these categories, and we expect the consumers to continue refocusing their spending away from goods and services, we didn't anticipate the magnitude of that shift,” Cornell said. “This led us to carry too much inventory, particularly in bulky categories, including kitchen appliances, TVs, and outdoor furniture.”
As a result, Target created room for “fast-growing categories,” leading to “incremental markdowns” in other areas, Christina Hennington, executive vice president and chief growth officer, said.
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In early June, the company mentioned discounts again in a press release, saying it is planning “additional markdowns” and “removing excess inventory and canceling orders” during the second quarter of 2022 that began in May.
Target is promoting deals in overstocked categories, including home items and appliances, ahead of its annual Target Deal Days event that happens online and in the company’s app from July 11-13. Shoppers will see 50% off some tech items and headphones, 30% off home items, 50% off select apparel and accessories, and 40% off kitchen appliances, among other markdowns.
Target isn’t the only company dealing with excess inventory, either. Costco leadership told investors in May that it was “heavy” in small appliances and home decor, and Walmart reported a 32% increase in apparel and other non-grocery inventory.
Matthews doesn’t expect deals at stores like Target will last long because overall demand is still higher than it was prior to the COVID-19 pandemic.
“As long as demand remains as high as it is, the inventory levels, at current levels, are not a problem,” he said.