Attention Target shoppers: You might be able to save money for in some aisles -- and we're not talking about Dollar Spot shelves.
As a result of consumer spending habits shifting, the retail giant is facing an inventory surplus in some areas.
Now, not only are they having to cancel orders on certain products from suppliers, but prices in some departments are getting slashed, the company said in a press release on Tuesday.
As pandemic restrictions continue to ease and Americans look to spend more time outside the home, traveling, attending events and dining out, the demand for some items that that consumers loaded up on during the pandemic has faded.
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Here's a look at what items you might be able to save big on, where Target is looking to cut back, and what you may have to pay more for.
What Kinds of Products Will be Marked Down?
Target has declined to give a dollar amount or detail the merchandise orders that are being canceled and depths of the discounts.
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However, consumer spending shows that the rush to stay at home and spend time time cooking indoors has waned. The Associated Press reports that with sales of large electronic items like TVs, and small kitchen appliances decreasing, Target is now left with a bloated inventory that it said must be marked down to sell.
“Retail inventories are elevated," Michael Fiddelke, Target's chief financial officer, told The Associated Press in a phone interview Monday. ”And they certainly are for us, in some of the categories that we misforecast. We determined that acting aggressively was the right way to continue to fuel the business."
What Kinds of Items is Target Canceling Orders on?
The Associated Press reports that Target is particularly canceling orders from suppliers on home goods and clothing.
With Americans now looking to wear dressier clothing for nights out on the town and meals out of the house, items in those categories are no longer in demand.
In some cases, some of the raw materials that were meant for some goods will instead be used for other products in higher demand, Fiddelke said. Many of the orders for products being canceled have a long production lead time of nine months, he said.
What Kinds of Products is Target Stocking Up On?
In aggressively clearing out unwanted goods, Target wants to make room for what is now in demand -- including groceries and makeup products.
What Kinds of Items Will be More Expensive?
The Associated Press reports that since Target is also facing sharply higher costs for everything from labor to transportation and shipping, and it will offset price cuts where it can with higher prices for goods now in demand, like food, groceries, makeup and beauty.
Target said the costs related to the moves will hurt the bottom line in the current quarter. Target now expects its second-quarter operating margin rate will be roughly 2%, down from around 5.3% it had expected last month.
Shares of Target Corp. fell 9% to $145.30 in premarket trading Tuesday and the stock of other retailers retreated with it. Walmart, Nordstrom and Macy's fell between 2% and 4%.
