Retailers Cancelling Orders Across All Categories
In June, Target and other retailers cancelled Billions of dollars of orders. In July, Walmart announced the cancellation of Billions of dollars of open purchase orders.
Home goods and apparel were the vertical sectors that suffered the most.
Many analysts feel that the excess inventory is related to supply chain delays, retailers were ordering up to 2 months early to avoid congestion, and forecasts were skewed due to consumers spending their pandemic relief checks.
Former Walmart CEO, Bill Simon, laid out the situation in start terms on CNBC. ″I mean an 8% increase [in inventory] would have been high, 15% would have been terrible, 32% [at Walmart] is apocalyptic. I mean that’s billions of dollars of inventory. That’s just frankly not managed very well.”
Most retailers feel that despite this market correction, their inventory balances will be back in order in 2023. Many retailers will be shifting some resources to “on-demand services. An example of this is Hot Topic taking Marvel-licensed products into their stores two days before a movie or new series is launched.
These cancellations should help stabilize the ocean pricing, while on-demand fulfillment should keep air cargo prices high.