As Inventory Increases, Retailers and Buyers Struggle to Keep Up

By: Sarah Zhong

A warehouse run by Liquidity Services in northeastern Pennsylvania is struggling to sell excess inventory due to the pandemic. They sell returns from major retailers, like Target and Amazon. The pandemic caused consumers to spend more frequently, but now, consumers are doing the opposite because of high inflation.

Some major retailers say shoppers are buying less clothing, equipment, and devices; instead, they are focusing on essentials like food and gas.

People bought many things and then returned them, resulting in more excess inventory being sent to the warehouse. In 2021, consumers returned an average of 16.6% of their purchases, which is more than double the rate in 2019.

“It is surprising to me on some level that we saw all that surge of buying activity, and we weren’t collectively able to see that it was going to end at some point,” said J.D. Daunt, the chief commercial officer at the company. “You would think that there would be enough data and enough history to see that a little more clearly. But it also suggests that times are changing, and they are changing fast and more dramatically.”

Retailers have begun to decrease prices in their stores and online. Last Monday, Walmart announced that its operating profits would drop intensely this year as it dropped prices on its inventory.

Many companies cannot afford to let the discounted items stay on their shelves because they must make room for seasonal goods and the products that consumers now prefer. While some retailers are holding big sales within their stores, others would rather not avoid making their customers expect big sales more often. Therefore, retailers rely on liquidators to do that for them.

Several people are concerned about the economy while it is in this state. High inflation is a big reason for reduced customers, and so far, the prices keep rising.

Charles Benincasa, a worker at the warehouse, said, “Companies are losing a lot of money. There is no free lunch.”