More product, more problems. At least that was the case last year, when a glut of inventory caused retailers to dramatically mark down their prices.
So far, inventories are much more in check. Although the majority of retailers said they expect sales will rise this holiday, 55 percent plan to keep their inventory levels consistent with last year, according to BDO.
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In theory, this should lead to fewer unplanned promotions—but it certainly doesn't mean retailers are in the clear. With deals abounding throughout the year, including an October that experienced deeper promotions year over year, the consumer has become trained to expect a deal, said Virginia Morris, vice president of consumer insights and strategy at Daymon Worldwide.
It's particularly concerning that retailers are having to mark down prices despite lean inventories, said Steve Barr, PwC's U.S. retail and consumer practice leader.
Compounding the issue is a warmer-than-usual fall, which has discouraged shoppers from spending on cold-weather items such as sweaters and fleeces. This could lead to deeper-than-planned promotions to clear through inventory, and cause a domino effect throughout the store, said Edward Hertzman, founder and publisher of Sourcing Journal.
"Especially when it comes to apparel, we're in a very vicious cycle right now," Hertzman said.
Labor disputes at West Coast ports could further complicate things, if delays prevent retailers from receiving timely shipments of popular items they're trying to restock.
Still, there's some room for hope. Morris said retailers have gotten better at tapping into loyalty programs and bundled deals to craft less margin-damaging promotions. Barr added that retailers are using data so that instead of offering store-wide promotions, they can limit discounts to what isn't selling.
Retailers such as L Brands' Victoria's Secret and Bath & Body Works are also expected to use better-timed promotions to capitalize on peak-selling days.