Christmas 2022’s inventory looks a lot like 2021
With last year’s in-store Christmas shopping stifled by the emergence of the Omicron strain of the novel coronavirus, and supply chain disruptions preventing orders from hitting the shelves on time, retailers ended up sitting on a lot of seasonal inventory. They packed it away for a year and, now as a new Christmas season approaches, they are selling it again.
In July of this year retailers had $548.8 billion of inventory packed away, and now holiday sweaters, decorations and artificial trees that have spent a year in storage are beginning to hit the shelves, according to Reuters. Kohl’s already has its overstock Christmas pajamas out and on sale for 25 percent off, and Express is putting its backed up holiday inventory into its outlet stores. This comes as early holiday shopping, even for discounted items, remains weak.
Retailers may be reliant this holiday season on merchandise they have had for a while, as the amount of imports coming into U.S. ports is projected to be the lowest in two years. Jonathan Gold, vice president for supply chains and customs policy at the National Retail Federation, said in a statement that retailers “have plenty of merchandise on hand to meet demand.” He was referring not to overstock, but to merchandise ordered earlier in the year to beat inflation and potential supply chain bottlenecks.
Projections about how much customers are planning on spending when this holiday season gets fully underway are mixed.
On one hand, 58 percent of U.S. consumers intend to cut back on non-food holiday spending this year according to a ShipStation study. This would represent a 14 percent drop in sales year-over-year and a $30 billion reduction of consumer spending.
In contrast, a recently released study by KPMG found that shoppers intend to spend 6 percent more during the holidays than they did in 2021, Women’s Wear Daily reported.
- U.S. retailers fill store shelves with leftover holiday inventory – Reuters
- Will overstocking get retailers through the holidays? – RetailWire
- Do retailers have the right stuff for Christmas? – RetailWire
- New Report From ShipStation Suggests U.S. Consumer Holiday Spend Will Decrease, Contrasting With Optimistic Merchant Expectations – ShipStation/BusinessWire
- KPMG Says Shoppers Plan to Spend More This Holiday Due to Inflation – Women’s Wear Daily
DISCUSSION QUESTIONS: Will shoppers buy 2021’s leftover Christmas inventory or react negatively to last year’s merchandise? Will retailers need to take a different approach to moving products that were packed and held versus those that are new in 2022?
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20 Comments on "Christmas 2022’s inventory looks a lot like 2021"
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Managing Director, GlobalData
In things like holiday decorations and basic sundries, I don’t think many consumers will notice whether it is new or last year’s inventory. The problem comes for fashion and pieces with designs; here there might be some resistance from people who bought the same items last year. That’s why it’s important to at least try to infuse some newness into assortments. This holiday will be a difficult one for volumes, so retailers need to pull out all the stops to stimulate demand.
Founder, CEO & Author, HeadCount Corporation
Yes, consumers will buy if the price is right — and there will be a lot of bargains as retailers work to bring down inventory levels.
Principal, Retailing In Focus LLC
The merchandise will sell if it is in “like new” condition — a risk of pack and hold — and if the product doesn’t look dated. Presenting the goods differently from new deliveries will tend to stigmatize it, but the product should be “priced to sell” for sure. Retailers don’t want these inventory problems to linger into 2023.
Vice President, Research at IDC
Christmas holidays have had recurring themes year after year. So long as the quality of merchandise is similar there should be little pushback in buying the merchandise. However inflation and uncertainty has changed how much they will buy. I would still expect Christmas specific merchandise sales to drop from prior years. “Just one tree this year will do.”
Principal, KIZER & BENDER Speaking
Basic items aside, do we really think consumers will be able to tell the difference between 2021 and 2022 goods? Maybe if the items stored since 2021 are a little worse for wear, but let’s be honest here: fashion goods haven’t been that innovative for most shoppers to notice.
Principal, Retail Creative and Consulting Agency
Pack and hold inventory was a common (dreaded) practice well before these disruptions. It depends on the retailers’ strategy and if they wanted to mark down unsold inventory. But this refers to strategic decisions to hold unsold merchandise as a hedge against some potential new supply chain issue. Assuming the product that was held is in good condition, customers do not care. An upside is that brands and retailers with off-price retail clients have what the customer would consider to be A- level product so they could become stickier shoppers.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Will the shoppers even notice? Will the shoppers even care?
If the retailer promotes them as new and adds a little buying incentive, shoppers won’t care. That traditional tee at $30 last year could be priced at $40 with inflation and reduced to $30 as a bargain.
Founding Partner, Merchandising Metrics
When apparel retailers were making the decision to pack away 2021 inventory, they were also in the process of designing and buying 2022 inventory. There would have been some opportunity to see where 2021 product could be seamlessly integrated with 2022. And for some items the integration might not be seamless, but could be made to work. Other product would never roll over and would have to be liquidated in season. Retailers that made pack away decisions at the last minute and had already started booking 2022 inventory might have a hard time this holiday season. Retailers who took a more planned approach have a better shot at coming out at planned inventory levels this January EOM, and will not have to do an instant replay on pack away.
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
For traditional items like classic sweaters, outerwear, and accessories, shoppers will be excited to buy at discounted prices. Trendy fashions or electronics that change quickly will be more difficult to sell, even at discounted prices.
Principal and Founder, Retail Strategy Group
In some cases it won’t matter. Holiday decor and fashion can live for a few seasons. The challenge will be, what will retailers and brands do to make sure they reduce how much they are buying in the first place? Will they learn to forecast and plan using better tools? I hope so.
Industry Consulting, Retail, CPG and Hospitality
The more generic an item is, the less concerned a consumer will be about the age of the inventory. But with fashion and designer goods, retailers may see more sluggish sales. I do think inflationary price increases will negatively impact consumers’ usual holiday spending habits, so retailers will need to get very aggressive in the way they promote products.
Chief Data Officer, CaringBridge
While inventory from last year is truly a year old, much of the inventory is either standard or novelty items that are unlikely to suffer the effects of aging. In addition, retailers will be more likely to discount partially depreciated inventory sooner in the holiday season this year than in previous years. As a result, I anticipate a strong holiday season in terms of transaction volume, but likely a reduction in revenue dollars due to more aggressive discounting.
SVP Global Marketing, Fluent Commerce
It’s all about the merchandising and marketing. Retailers should be able to put a fresh spin on what they’ve got – and at the end of the day, most people won’t notice. Interestingly, in a recent holiday shopping study by Fluent Commerce they found that 27 percent of U.S. shoppers plan to spend more, 41 percent about the same, and 32 percent plan to spend less, with Millennials and Gen-Z planning to spend more on their holiday shopping this year.
Last year 28 percent of U.S. shoppers indicated they would start shopping before November. This year it’s 25 percent.
Interestingly, 28 percent plan to shop exclusively online this holiday season, 45 percent both in-store and online. And of the in-store shoppers, 68 percent indicated they are likely to check online to see if an item is in stock before visiting a store – so getting inventory right will be essential.
You really can’t tell the difference in inventory – styles may have changed a bit, but most of it came later and customers did not get a chance to see it. Additionally, it’s been Christmas for a few months already at several retailers which helps sell through that inventory. I suspect more sales to come as customers hold on to their money due to the uncertain economic climate.
Chairman Emeritus, Relex Solutions
While it is old stock to the retailer it is new stock to the customer. A good opportunity for retailers to clear that inventory, if sales are a little off they should still clear what they are holding. I have always found in tough economic times consumers reduce spending on gifts and spend more on food for Christmas as an escape from reality.
Director, Retail Strategy, CI&T
This holiday season is really going to highlight the demand forecasting blunders and inventory discrepancies of the last year. Consumers will absolutely expect deep discounts on merchandise they determine is outdated, but the tricky part is that they’ll also expect seasonal discounts on new items around Black Friday. That’s going to be difficult for retailers to afford.
Director, Growth Marketing for Wizard
It depends on the retailer and the product. Old decorations = no biggie. But for old fashion, it will have to do a lot with the price point and the buyer. If I were a retailer, I’d try to make the old new again by styling it in new ways and merchandising it with fresh merch.
This just seems right. Yes, the best practice is an entirely new inventory. But this reminds me of the fundamentals of doing business — and responsible to the world by not tossing away last years still good inventory.
CEO, New Sega Home
As long as the inventory doesn’t have sharpies crossing out 2021 with 2022 written in, it is unlikely consumers will notice for general merchandise. Of course retailers will need to augment these goods with the current buzz-worthy items as well.
Founder & CEO, HotWax Commerce
Classics like Christmas Pajamas never run out of trend. It won’t matter to customers if such an assortment is released this year despite being packed the year before. However, retailers cannot always use the strategy of “Packaging and Holding” inventory. If this approach is followed every year, they will fall victim to the inventory overstocking cycle. Therefore, to be able to stock new products in the next year, retailers must get rid of their current inventory.