At the beginning of the Covid pandemic, every store was scarce of supplies. Some products like toilet paper suffered global shortages for months. Companies had to order weeks in advance to keep up with supply and demand. Two years into Covid, stores are experiencing extreme surpluses. With consumers cutting down on discretionary purchases because of high inflation, retailers are now stuck with more inventory than they need. Some major retailers say shoppers are buying less clothing, gardening equipment, and electronics, and focusing instead on basics like food and gas,” said journalist George Etheredge.

Most of the surpluses were donated to Liquidity Services, a company that collects extra products from major retailers like Target and Amazon and resells them at lower than market value. The facility opened in November 2021 and is operating at a high scale, nearly the size of 2 football fields. These losses have been estimated to cost $761 billion; that’s more than double Elon Musk’s net worth.

“It’s unprecedented,” said former Walmart executive Chuck Johnston. “I have never seen the pressure in terms of excess inventory as I am seeing right now.” Even with Liquidity Services, some products are donated to charity while others are burned for electricity or thrown out to landfills. “We are reducing the carbon footprint,” said executive director of Reverse Logistic Association Tony Sciarrotta, “But there is still too much going to landfills.” Inventory management is important to company profits and the environment; it’s hard to control supply and demand.

Link:https://www.nytimes.com/2022/07/30/business/retail-returns-liquidation.html