Markdowns Drive Retailers to Reinvent Commerce’s Middle and Last Miles

Inventory, of course, is the lifeblood of retail.

And in many ways, inventory remains retailers’ most significant challenge.

What moves off the shelves or stays stuck on the shelves is a function of matching supply and demand.

And amid this pandemic, consumer demand is nothing if not fluid.

To that point: The Wall Street Journal reported Monday that a number of marquee names in commerce, including Target, Macy’s and Walmart, are getting shipments of the goods that were in high demand during the pandemic’s earlier, sweeping waves. But two years on, as those consumer electronics and furniture reappear on shelves, finally at their destinations as supply chain snarls hit hard — consumers have moved on to other things.

Thus, discounts loom, heating up with summer, reported the Journal.

Grappling with the Great Reopening 

The great reopening of various economies means that furniture will be less in demand, and so will loungewear. Big-ticket items, we note, will likely be set for a pullback as inflation continues to skyrocket.

Some retailers, like Target, have already announced they’re planning big discounts. Others with robust warehouse capacity, like Walmart, may be more likely to hold on to their excess inventory, analysts say.

All of this points to margin pressure. At the same time that companies like Target embrace heavy discounting, they still must grapple with higher operating costs — especially in the form of higher wages that must be paid to attract and keep workers.

The companies with the most well-capitalized balance sheets, such as Walmart, have been busy building out their own logistics operations. Amazon, too, of course — as Bloomberg has noted, the eCommerce giant has tripled the industrial space it owns here in North America. Elsewhere, Prologis, which has about a billion square feet of space used by Amazon and others, said it would acquire rival Duke Realty for $26 billion.

The middle and last miles are getting a makeover, anticipating the continued pivot to eCommerce and same-day delivery. At a high level, building out or buying a portfolio of warehouses and distribution space brings inventory ever-closer to consumers’ doorsteps and makes it easier to anticipate and satisfy demand.

And in one example of leveraging advanced technologies to improve all manner of activities within the warehouse setting, as reported recently, Walmart U.S. said in a statement announcing the retailer’s expanded use of its artificial intelligence (AI)-driven, robotic warehouse automation pact with Symbotic. Using the robots will improve response time for store orders and inventory flow.

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