From Nike to Canadian Tire, the world’s biggest retailers and brands are drowning in more merch than they know what to do with as consumers pull back on spending.
Driving the news: Trans-Pacific shipping rates have fallen ~75% compared with last year as the same retailers rush cancel orders as they struggle to clear their bulging inventories.
- Retail sales in Canada saw their first drop in seven months back in July and the volume of goods sold fell by 2%, one of the largest drops seen since 1998.
- Consumer spending on furniture and clothing is where sales fell the most—exactly stuff that retailers stocked up on because they sold so well early in the pandemic.
Why it matters: On one hand, backed-up inventories could mean better deal$, but heavy blows to trade activity also mean that the demand for goods flowing out could be impacted.
- In July, exports declined in six of Canada’s 11 product sectors, and the value of goods exported decreased 2.8% (ending a six-month hot streak of increases).
What’s next: Retailers resort to markdowns, selling goods to liquidators, or using the ‘pack and hold’ method (putting their floral prints in storage, hoping they’re on trend next summer).
Zoom out: Just earlier this year, international ports were logjammed as companies ramped up their orders to get ahead of the anticipated holiday demand. Oh, how quickly the tide turn.