Walmart cutting prices on clothing and some big-ticket items to avoid inventory buildup

MOBILE, Ala. (WPMI/AP) — Walmart said inflation is actually pushing them to cut prices on some products. Walmart is cutting prices on clothing, and some big-ticket items to avoid inventory buildup (Video: WPMI)

CEO Doug McMillon said rising food and fuel prices have many shoppers pulling back on many discretionary items, like not buying new clothes and other items.

To get rid of a huge buildup of inventory, the company said it’s slashing prices on clothing and some big-ticket products.

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The company, based in Bentonville, Arkansas, also expects a general slowdown in customer spending in the second half of the year.

Inflation remains at the forefront of many Americans’ minds. Stock markets were spooked Monday, The Associated Press reported after the retail giant warned its profits are being hurt by rising prices for groceries and gas, which are forcing shoppers to cut back on more profitable discretionary items such as clothing.

Walmart’s profit warning in the middle of the quarter was rare and raised worries about how the highest inflation in 40 years is affecting the entire retail sector.

The stocks of many major retailers, including Target, Macy’s, and Kohl’s, fell following Walmart’s Monday announcement. The warning follows reports by Walmart, Target, and other major retailers in May that a faster-than-expected shopper shift away from items that were popular at the height of the pandemic, such as casual clothing and home goods, left them with extra inventory they needed to further discount.

As inflation has soared to its highest levels in four decades – more than 9% — consumers have changed shopping habits to save money accordingly. With gas and food prices rising, other areas have seen sagging sales. That’s no more evident than with mega-retailer Walmart, which has begun cutting prices on clothes and high-end products to help clear shelf space and get the products moved.

With shoppers rethinking their carts to see where they can cut back, there’s been less discretionary spending on things non-essentials. This leads retailers like Walmart and Target, to have a backlog of inventory that they can’t move. Walmart, for example, has dropped hundreds of products into “Rollback” sales, from high-end techs like iPads and the Meta Quest 2 to underwear and sneakers.

Merchandise-like clothes are season-specific, so if consumers aren’t buying summer-related items now, retailers have to cut prices to clear shelf space. This reduction in discretionary spending has also coincided with supply chains returning to normal in the wake of the pandemic, which means even more excess merchandise.

While most of the news regarding consumer spending has been bad for 2022, this glut of merchandise is an invitation to many to revisit their wants. In short, you can potentially score great deals at Walmart, even if higher inflation has made you think otherwise.