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Macy's and Kohl's Have a Similar Problem Walmart and Target Face

After Walmart and Target address a business problem, Kohl’s and Macy’s follow suit.

Retailers are still working through the disruptions caused by the covid-19 pandemic.

The large retail department stores were inventive in how they combat the pandemic. Many stores rallied by offering new services, such as online shopping, curbside pick-up and delivery. These were not new concepts, but the retail industry had an answer to the stay-at-home orders by bringing products to the customers in new ways. The retailers have shown resilience in the pandemic and recovery of it as well. However, in the recovery new challenges are being faced by the department stores.

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Are Customers Picking Up the Slack from Employees?

Walmart  (WMT) - Get Free Report fared well, all things considered, during the coronavirus crisis. The current crisis Walmart is facing is dealing with inventory and staffing. Being understaffed is the norm these days, it is no different for retail. More and more self-checkouts are being used to fight against low numbers of employees showing up for work. Walmart is simultaneously dealing with an overabundance of unproductive inventory to boot. 

Target  (TGT) - Get Free Report has maintained its pandemic services that customers have grown to love like the curbside pick-up and delivery. The curbside pick-up allows customers to be able to pick up their purchases usually within a couple hours of the completed order. Target is also dealing with the labor shortage, and customers might be seeing more self-checkout terminals open compared to open checkout terminals operated by Target employees.

Walmart and Target have not shied away from the struggles with inventory management. Target's strategy for dealing with too much inventory is to ask customers to keep their purchases when they try and return or exchange them. Target will still give the customer the exchanged item and or their refund, leaving the customer with a product they didn’t want. The customer still gets their refund and or the product they did want. It was more financially sound for the retailer to ask the customer to take the unwanted product with them than to try and store and process the returned goods.

Macy's Lead

Other Major Retailers Cite Similar Struggles Like Target and Walmart

Kohl's  (KSS) - Get Free Report has made some major changes following the failed sale to Franchise Group  (FRG) - Get Free Report last month. Kohl’s has struggled over the years to keep its customer base happy and their carts full, so the retailer has partnered with Sephora and is bringing in new fresh brands to entice customers with brands to feature women-owned businesses and companies that give back. Kohl’s was expecting the back-to-school shopping to relieve it of much inventory, however with the economy experiencing record inflation, the department store has so far been left holding the bag.

Macy’s  (M) - Get Free Report is getting more aggressive on pushing its at-home categories, such as sleep wear, home goods, and activewear as much of the consumer base is making different purchasing decisions. Consumers are spending less on these categories compared to what they have spent over the last three years. The deep discounts the department store is focusing on were all big sellers during the pandemic, so the department store's overstock is not due to over purchasing.

Nordstrom  (JWN) - Get Free Report while citing the same challenges, stated that while it will be working to get rid of overstocked inventory, no one category is mentioned as a major player in the issues with stock management.

Shared Pains Through Economic Difficulties

The labor shortage is a pain felt by all industries, but the inventory issues faced by department stores is unique. The department stores that may fair better during inventory management issues are ones that carry more than apparel and home goods, like that of Walmart and Target. Macy’s, Kohl’s and Nordstrom don’t have the essentials like grocery to curtail lost sales.