Walmart won’t be doing its own event to rival Amazon Prime Day this year, according to a company spokesperson.
The big-box giant, like other retailers, has typically thrown its own overlapping sales event. Yet this year, much of its merchandise is already on sale.
Bright yellow “Clearance” signs have become a fixture in many stores in recent weeks, and its website is touting thousands of Rollbacks, a signature term for the discounter’s 90-day price cuts, on bicycles, air fryers and more.
“You go in stores now, it’s almost like Prime Day in some of these categories,” said Rupesh Parikh, a senior analyst for Oppenheimer & Co.
Walmart’s heavy discounting illustrates the steps that retailers are taking to sell through excess merchandise that has racked up in the back of stores and in warehouses — even if that hurts profits. Walmart, Target and Gap are among the companies coping with higher-than-usual inventory levels. Retailers have chalked up the problem to a mix of factors, including ordering too much, getting seasonal goods too late, pandemic categories losing luster and consumers spending more on services instead of stuff.
Target warned inventors last month that it will take a hit to its profit margins as it cancels orders and marks down unwanted items.
The abundance of inventory and promotions creates a unique backdrop for this year’s Amazon Prime Day. The sales event will take place Tuesday and Wednesday. Since its debut in 2015, it has become a shopping holiday that has lifted sales not only for Amazon, but nearly every online retailer.
It also tees up a more challenging period for the retail industry. Inflation has cut into Americans’ budgets, leaving fewer dollars for discretionary spending. Heavy promotions by some retailers pressure others to cut prices, too. And after a pandemic period marked by fewer discounts and higher profits, shoppers may revert to a bargain-hunting mentality as the back-to-school and holiday shopping seasons approach.
“You’re going to train that consumer to wait for deals,” Parikh said.
High levels of markdowns at Walmart stores caused Oppenheimer to take the company off its list of top picks for investors on Thursday. Instead, the firm’s top picks in the food retailing/discounter category are Dollar General, which draws budget-conscious customers like Walmart but has fewer big-ticket items vulnerable to markdowns, and Costco, which has shoppers who care about value, but tend to have higher incomes.
Some retailers are still pressing ahead with sales events that coincide with Prime Day. Target is hosting Deals Days, a three-day event from Monday to Wednesday with discounts on thousands of items across every category from electronics to beauty. Best Buy is having a Black Friday in July Sale with deals on laptops, TVs, smartphones and more from Monday to Wednesday. And Macy’s kicked off its Black Friday in July event on Thursday and it will run through Wednesday, with specials in store and online on apparel, accessories, beauty and home.
While Walmart is skipping the flashy marketing and short-term sales event, discounts will be plentiful for shoppers who hit its stores.
Oppenheimer’s price target for Walmart is $165.00, nearly a third higher than where the company’s stock is currently trading. Parikh said the discounter could benefit from attracting more price-sensitive shoppers who seek low-priced groceries and essentials. Yet he said in the quarters ahead, it will get compared with a pandemic boom period when consumers had extra stimulus dollars and fewer places to spend them.
As it goes up against those tough comparisons, the economic outlook has changed.
“It’s not ‘Ok, let’s clear this out and we’re going to go back to what everything looked like.’ That’s just not the case,” Parikh said. “Food inflation is really high. Gas prices are high. These consumer pressures, as they stay elevated, it just builds on the consumer — especially the lower-income consumer.”
Plus, there are signs heavy discounts will spill into next season. Walmart will take “a couple of quarters” get back to more typical inventory levels, the company’s U.S. CEO, John Furner, said at an investor event in early June.
On Thursday, Urban Outfitters-owned apparel retailer Anthropologie sent an email to customers to promote an upcoming sale: A 25% discount on fall clothing. It’s timed for this coming weekend, in the thick of summer.
CNBC’s Lauren Thomas contributed to this report.