Big-box companies are offering Black Friday deals now to offload excess inventory and compete with Amazon.

 

Retailers aren’t waiting around for Black Friday to offer deals, reports the Wall Street Journal. The biggest shopping day of the year may be six weeks away, but big-box retailers, including Walmart and Target, are offering early sales to attract holiday shoppers and also as way to get rid of excess inventory and compete with Amazon.

Target announced yesterday that its Black Friday sales are starting now, with discounts up to 50% on toys and games, electronics, kitchen appliances and more. New weekly deals debut each Sunday, now through Thanksgiving weekend. Target’s holiday deals are happening three weeks earlier than last year. The company said in June that with consumer spending slowing, it would need to offer discounts to get rid of unwanted goods, according to the Journal.

“We know our guests are eager to start their holiday shopping and Target is here to help—and help them save big, whether that’s on gifts that family and friends are sure to love or stocking up on all the essentials for a season filled with festive gatherings,” said Christina Hennington, executive vice president and chief growth officer, Target, in a statement. “By making our Black Friday deals available even earlier this year, and bringing back our popular Deal of the Day, we’re giving guests even more reasons to choose Target for everything they want and need this holiday season.”

Walmart is also offering sales starting this week for holiday shoppers and is extending its return holiday policy to run through January 31, 2023. The retailer is offering curbside returns and return pickup from home for Walmart+ members.

The move to push up Black Friday deals comes after Amazon announced last month that it was hosting a second Prime Day-like event, which begins today. Amazon dubbed it a holiday shopping event, and it features a first-ever top 100 list, which includes a curated selection of deal from brands. New deals from the list will drop throughout the event.

“We are so excited to help Prime members kick off the holiday season with Amazon’s new Prime Early Access Sale—an exclusive opportunity for members to get deep discounts on top brands we know they are looking for this time of year,” said Jamil Ghani, vice president of Amazon Prime. “And members can start enjoying exclusive Prime benefits and offers now, plus find gift ideas for the family with our holiday gift guides and this year’s Toys We Love list.”

This year, retailers have had excess inventory, while shoppers have shifted their habits. The past two years have brought record online spending, and shoppers were willing to buy all sorts of items, which took its toll on the supply chain. In anticipation of continued spending and to get ahead of supply chain issues, companies stocked up. But then decades-high inflation hit Americans. High gasoline and food prices forced consumers to be more selective in their spending, leaving companies with more inventory than they could sell.

“What Amazon wants to do is be part of that early crowd and get a bite of the cherry,” Neil Saunders, managing director at GlobalData Retail, told the Associated Press. “And the best way to do that is, rather than having little deals here and there, is to have a big day that’s almost like a holiday kickoff.”

Morgan Stanley analysts said in a report that retail profits will decline, as retailers compete to cut prices faster than the other, which they called “a race to the bottom.” This tactic could hurt margins and fuel an earnings slowdown. But if retailers don’t offer aggressive discounts, they risk paying high costs to hold excess inventory, the analysts said.

The New York Times recently reported that discounting doesn’t get to the root of the problem, according to some analysts.

“There is a point at which lower prices don’t trigger incremental demand because the consumers already have it,” Simeon Siegel, a managing director at BMO Capital Markets, told the Times. “It’s not an indication that the company is dead. It’s not an indication that they’re never going to buy it again. They just need the time lag.”

Siegel told the Times that retailers need to realize that customers are rethinking how they spend. Large purchases, such as patio furniture, may now only happen once for the consumers, and there is more lag time between purchases now. Someone may buy a candle every two to three months, whereas they were buying one every month over the last few years. And consumers are spending more on travel and experiences now than over the past two years.

With all of these variables, lowering prices might not trigger the demand a retailer wants, Siegel told the Times. It might simply just cut into a company’s profits.

 

Original source

 

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