Here come the discounts at Walmart, Best Buy and Gap

Here come the discounts at Walmart, Best Buy and Gap

walmart (WMT), best buy (BBY), Difference (GPS), Target (TGT)Bath & Body Works and others are ramping up promotions and lowering merchandise prices to entice inflation-weary shoppers to purchase additional products on their shelves.

Rising inflation has forced many consumers out, especially low- and middle-income shoppers, according to multiple retailers. Cash-strapped shoppers are struggling to afford groceries and gas and have cut back on discretionary spending.

It left too many bad things for retailers: think back to the early days of the pandemic, when everyone was remodeling their homes and buying new laptops. Stores are now overloaded with this stuff, and they have to reduce these items to juice demand.

“These retailers have mispositioned their inventory,” said Brian Nagel, retail analyst at Oppenheimer & Co. “In some areas, they are too heavy on inventory and need to empty it.”

Where to find discounts

So shoppers can expect to find more deals on discretionary goods such as apparel, electronics, furniture, home goods and bath items – items that have been in high demand since the start of the pandemic and that many people may have already purchased.

Walmart: “Rising levels of food and fuel inflation are affecting how customers spend,” affecting their ability to buy general merchandise, Walmart CEO Doug McMillon said last week. Walmart said it would need more inventory markdowns than expected, especially for apparel.

The company also has introduced a new program for customers to purchase refurbished items from brands such as Apple (AAPL) and Samsung for cheap.
Best Buy: Wednesday, Best Buy said inflation was impacting spending on consumer electronics, and the electronics industry would promote more stuff.

“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has weakened further,” said Corie Barry, CEO of Best Buy.

Difference: Earlier this month, Gap said it increased promotions to get inventory out during its second quarter, while Bath & Body Works said it did the same as it saw store traffic slow.

“Customers, especially low-income customers, have become more cost-conscious and are limiting purchases and/or seeking out lower-priced merchandise,” the company said. “They are impacted by the global inflationary environment.”

Target: Last month, Target said it was carrying too many large and bulky products such as furniture, TVs and kitchen appliances in its previous quarter as consumers moved away from such products. “We didn’t anticipate the magnitude of this change,” Target CEO Brian Cornell said.

Target has reduced some of these larger items to make room for the most in-demand products.

Discount stores: Shoppers may also be able to find more bargains at clearance retailers such as TJX (TJX) and Burlington (BURL), which capitalize on excess inventory. These chains buy high-end products at low prices and then resell them to shoppers at a lower price than their original price.

“The shopping environment is now better than it has been for years,” Burlington CEO Michael O’Sullivan said last month. “We’re seeing marks that we haven’t seen in a few years.”

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