A glut of inventory for America’s big retailers has left small- to medium-sized businesses (SMBs) across the country scrambling to find warehouse space.
Real estate and logistics experts say larger companies need more room to keep their excess inventories, which has ratcheted up costs for smaller merchants, The Wall Street Journal (WSJ) reported Wednesday (Oct. 5).
Karen Galena, president of First Logistics, which owns four Chicago area warehouses that cater to retailers and manufacturers, said in the report that bigger retailers are willing to pay higher prices as storage space becomes increasingly rare.
“It’s tough for the small guy,” she said, per the report, adding that labor and other costs are increasing for companies like hers.
The average nationwide rental rate rose from $7.13 per square foot in the third quarter of 2021 to $8.70 per square foot this year, the report stated, citing figures from commercial real estate brokerage firm Cushman & Wakefield.
As PYMNTS has reported, several retailers find themselves struggling to offload excess inventories as consumer demand has slowed.
Nike, for example, has seen its North American inventories jump 65%, while also dealing with declining sales in China and diminished revenue growth.
Read more: Nike Promises ‘Decisive Action’ on Inventory, More Investment in D2C
“As a result, we’re taking decisive action to clear excess inventory, focusing on specific pockets of seasonally late product, predominantly apparel,” Chief Financial Officer Matthew Friend said during an earnings call last week.
Walmart and Target are both dealing with bloated inventories of their own, a situation that led both chains to launch their holiday sales season early this year.
See more: Walmart Joins Other Retailers in Early Holiday Sales
The battle for warehouse space is just one of many headaches facing SMBs these days, as PYMNTS research has found.
Read more: 57% of Main Street SMBs Raising Prices Just to Maintain Margins
Nearly three-quarters of the businesses in the retail segment reported cost increases, and 60% of those businesses have raised their prices accordingly.
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