Walmart rollback pricing signs are displayed as customers shop during the grand opening of a new Wal-Mart store location in Torrance, Calif.
Patrick Fallon | Bloomberg | Getty Images
walmart According to a company spokesperson, this year Amazon will not hold its own event to compete with Prime Day.
Like other retailers, the big-box giant has usually thrown its own overarching sales schedule. Yet this year, most of its merchandise is already on sale.
Bright yellow “clearance” signs have become a fixture in many stores in recent weeks, and its website is a signature word for the discounter’s 90-day price cuts on thousands of rollbacks, bicycles, air fryers, and more.
“The longer you go to the store, it’s almost like Prime Day in some of these categories,” said Rupesh Parikh, a senior analyst at Oppenheimer & Co.
Walmart’s steep discounts reflect the steps retailers are taking to sell through excess merchandise that has been racked in the back of stores and in warehouses — even if it hurts profits. walmart, target And gap Companies are among the companies experiencing higher-than-normal inventory levels. Retailers have chalked up the problem to a mix of factors, including ordering too much, receiving seasonal goods too late, losing the sheen of pandemic categories and causing consumers to spend more on services rather than goods.
target warned inventors last month That it will affect its profit margin as it cancels orders and flags unwanted items.
The abundance of inventory and promotions sets a unique backdrop for this year’s Amazon Prime Day. The sales event will take place on Tuesdays and Wednesdays. Since its launch in 2015, it has become a shopping holiday that has spurred sales not only for Amazon, but for nearly every online retailer.
It also presents a more challenging period for the retail industry. Inflation has cut Americans’ budgets, leaving fewer dollars for discretionary spending. Heavy promotions by some retailers put pressure on others to cut prices as well. And after a pandemic period marked by fewer discounts and higher profits, shoppers may return to a bargaining mindset as the back-to-school and holiday shopping season approaches.
“You’re going to train that consumer to wait for deals,” Parikh said.
High markdowns at Walmart stores prompted Oppenheimer to remove the company from its list of top picks for investors on Thursday. Instead, the firm’s top picks in the food retailing/discount category are Dollar General, which attracts budget-conscious customers like Walmart, but fewer big-ticket items are vulnerable to markdowns, and costcoIn which there are buyers who care about value, but have high income.
plenty of discount
Some retailers are still going ahead with sales events that coincide with Prime Day. Target is hosting Deal Days, a three-day event Monday through Wednesday, with discounts on thousands of items in every category from electronics to beauty. best Buy There’s a Black Friday sale in July with deals on laptops, TVs, smartphones and more from Monday through Wednesday. And Messi’s Thursday made its Black Friday debut in July and will run through Wednesday, with specialty stores and online selling apparel, accessories, beauty, and at-home.
While Walmart is skipping flashy marketing and short-term sales events, the discounts will be plentiful for shoppers visiting its stores.
Oppenheimer’s price target for Walmart is $165.00, which is about a third higher than the current trading volume of the company’s stock. Parikh said the discounter could benefit from attracting more price-sensitive shoppers who want lower-priced groceries and essentials. Yet he said that in the quarters ahead, it would be compared to the boom period of a pandemic, when consumers had extra stimulus dollars and fewer places to spend them.
As it goes against those tough comparisons, the economic outlook has changed.
“It’s not like ‘Okay, let’s clear this up and we’re going back to what everything looked like.’ It’s just not like that,” Parikh said. “Food inflation is really high. Gas prices are high. These consumer pressures, as they stay high, it only builds on the consumer — especially low-income consumers.”
Furthermore, there are indications that huge discounts will spread next season. The company’s US CEO John Furner said at an investor event in early June that it would take “a few quarters” for Walmart to return to more typical inventory levels.
on Thursday, urban Outfitters-Proprietary apparel retailer Anthropologie sent customers an email to promote an upcoming sale: 25% off fall clothing. It’s time for this coming weekend, in the thick of summer.
CNBC Lauren Thomas contributed to this report.