Walmart (WMT) moved merchandise by offering value to consumers, especially in groceries, its Chief Financial Officer David Rainey told Yahoo Finance, which drove traffic. Target, in contrast, found that consumers didn’t want its usual, higher-margin areas of strength: pinched by inflation, shoppers saved up to buy necessities instead of apparel, electronics, and home goods.
That means Target (TGT) has to put items on sale to reel ‘em in.
“They're looking for promotions and are looking for that great deal. And I would expect that promotional focus will continue throughout the holidays,” CEO Brian Cornell said on a call with reporters. Maybe that’s why the retailer is holding its “biggest Black Friday week sale ever.”
Consumers have sniffed out those deals, and suspect more are coming. According to a recent Morgan Stanley/AlphaWise survey, “70% of shoppers said they are waiting for stores to offer discounts before they begin their holiday shopping” – and they’re waiting to buy until discounts top 20%
“High inventory levels will give stores an additional incentive to offer disco, with a smaller inventory boost (12% compared with a 37% year-over-year increase in the second quarter) amid “est wallet share but at a hit to margins,” Morgan Stanley’s Michelle Weaver and Katie Solovieva wrote in a note to investors.
Its possible discounts will last even beyond the holiday season. Barclay’s Adrienne Yih told Yahoo Finance, "inventory in this sector probably gets cleaned up by mid-year next year.” Retail consultant Jan Rogers Kniffen disagreed, saying retail sales strength means promotions will soon be winding down.
“I’m pretty sure we’re going to see the consumer shop later because they think there’s going to be deals, and I’m willing to be there will be a lot of them that are disappointed, because we’re going to see a slow environment for promotion, totally unlike what we saw in the first half," Rogers said. |
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