Last week, Target announced that its profits will take a short-term hit as it takes several steps to get rid of excess inventory, from marking down slow-moving products to canceling orders to suppliers. “‘We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment,’ CEO Brian Cornell said in an interview with CNBC.”
Still enjoying your column, Gad, following from the sidelines. Especially with headline writing like this one! :) Kevin Brennan
Fast forwarding to December 2022 holiday season and happening to catch this blog as a new subscriber, I wonder what are the emerging trends in terms of structural investments by the large retailers to near shore their supply chain and in recalibrating their inventory with the new and emerging buying pattern? It was not rocket science to call out what was needed for resiliency was to reduce dependence on China, come up with a near shore and localization strategy, bet on stocking essentials (things that do not go out of fashion and can expect to have a moderate but dependable demand etc.) However, implementing these are easier said than done. I would love to learn of how the needles have moved. The low hanging fruit was to go and order more of what seems to be in demand from the same sources and that I can see has been happening everywhere.
With regards to Amazon's growing market share relative to the Walmarts and Targets, unless these retail giants can rebrand on convenience and variety and have reach out campaigns to their customer base , the train has left the station and an easy google search for a product will tell you that they are no longer on the top of the search. Even applies to Home Depot and Lowes. Do you agree?
How much longer would you predict these supply chain issues to last?
Also, seeing as percent revenue for Amazon was higher this past year than Target, could the high ratios of inventory to sales also be explained by people being more inclined to shop through Amazon relative to other stores from the pandemic?