Big Box Retailers Preparing For ‘Much Bigger’ Holiday Season With Inventory Competition

With retailers betting on a bigger and better holiday season than 2020, many stores are gearing up for what is likely to be an intense demand. Of course, this year, they are also preparing for more than just sales from the hottest toys and electronics of the season, as the race is on to have the strongest level of overall product inventory as well.

Following pandemic-depressed levels in 2020 and factory shutdowns and shipping bottlenecks that have been causing some headaches when it comes to items still being in stock, big box stores such as Best Buy, Target, Walmart, BJ’s and Kohl’s are all jockeying to come out on top during a critical fourth quarter, The Wall Street Journal reports.

The retailers, which will all have a significant advantage when it comes to supply over smaller businesses, are all pushing to get more goods after their inventories all suffered this year following less ordering during the early months of the pandemic and the supply-chain backups that have continued to bring empty shelves and higher prices due to inflation. The aggressive approach seems to be working, with inventories starting to tick back up from the lowest levels in nearly 30 years.

Walmart, for example, has rebounded by taking tactics such as chartering their own ships to bypass the bottlenecks that have occurred in other ocean shippers. A spokesman for the company told WSJ that inventories were down 4.6% in U.S. stores between the second quarters of 2021 and 2020, but consolidated inventories increased 16% over a year prior and 8% from the same quarter in 2019 in the quarter ending July 31. Inventories totaled nearly $47.8 billion.

Its biggest competitor, Target, saw inventory rise almost $11.3 billion in value in the most recent quarter, an increase of more than 26% over the same period one year ago.

While there is some risk to trying to beef up inventory, increased sales projections for the holiday season, even if shutdowns were reinstated, outweigh the risks.

“I think the bigger risk is not having enough inventory versus having too much,” Rod Sides, head of Deloitte LLP’s U.S. retail and distribution practice, said. “We’re projecting a much, much bigger holiday season.”

While the holiday season may give retailers a needed boost in sales and potentially inventory, the effects of the COVID-19 pandemic are still taking their toll on the traditional holiday season. Big-box retailers like Target, Walmart and Best Buy all announced plans to remain closed on Thanksgiving Day for the second year in a row and the discounts aren’t expected to be as steep as in years past due to the continued bottlenecking and restraints on inventory.