Economists say surplus of inventory could be bad news for retailers, good news for consumers

Published: Jan. 2, 2023 at 5:16 PM CST
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BIRMINGHAM, Ala. (WBRC) - The new year means new pressure for retailers.

Economists are predicting tough times for retailers as they close out the holiday shopping season. But what does this mean for you, the consumer?

The holiday shopping buzz is over for many of us now, but retailers are hoping you’ll use those gift cards and shop huge deals as they try to clear out a surplus of inventory.

January is often a forgotten month for consumers.

But for retailers it could be the difference between a successful holiday quarter or not.

“There’s a lot of inventory out there. A ton of inventory. And retailers did a lot to get rid of it during December, but there’s still a ton.”

Rich Hollander with Axcelora said that’s potentially bad news for retailers, but good news for you.

He said as many stores close out their fiscal years in the coming weeks, you’ll be able to take advantage of huge sales.

“The average consumer is going to love January. And remember, a lot of people got gift cards. Retailers can’t recognize that income until the gift card has been spent and the retailers will work hard to get them to spend it with them,” Hollander explained.

But while retailers are working hard to unload their current stock, Hollander said new inventory could be slow to arrive stateside.

That’s because of staffing changes in China.

“Changes around Chinese New Year. In the past, they’ve worked hard to get people to come back to work. In this particular instance they’re saying, ‘Stay another week. Our orders are much lighter from U.S. retailers,’” Hollander said.

Economists said there are signs that consumers may be ready to cut back on their spending.

They said food prices are still high and the percentage of disposal income people have now is low.

Economists said consumers might also be in for a reality check when they get their credit card statements from the holidays.

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