Major retailers are working through an unexpected inventory glut. Big box stores are working through an unexpected glut of inventory: TVs, kitchen appliances, hoodies and other hot pandemic items. Part of the problem is the bullwhip effect.

What happens when people want all the air fryers and then, suddenly, they don't

  • Download
  • <iframe src="https://www.npr.org/player/embed/1112945860/1113528168" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

MARY LOUISE KELLY, HOST:

Too many TVs and kitchen appliances and hoodies. Stores like Target and Walmart have been working their way through stockpiles of stuff that people really wanted during the pandemic until suddenly they didn't. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: You might be wondering, didn't we talk about shortages for the past two years? Yes, and that's actually part of the story. There's a hot term in retail these days...

(SOUNDBITE OF BULLWHIP CRACKING)

SELYUKH: ...The bullwhip effect. To explain it, let's go to this kitchen appliance aisle at a Target store in Lincoln, Neb.

There is an air fryer that's half price, basically, $55, save $45.

The bullwhip effect is part of why it's on sale. Here's how it works. In the pandemic, people went crazy for air fryers. When demand jumps like that, stores order from suppliers and suppliers order from factories. And each step of the way, they order or make more and more and more until, abruptly, we have too many air fryers right when people are kind of done buying them.

RACHEL PREMACK: And then suddenly, we have a goods surplus instead of a goods shortage.

SELYUKH: Rachel Premack follows the supply chain for the logistics outlet FreightWaves. Her own shopping habits perfectly illustrate how this played out across lots of products. For the past two years, she's spent her stimulus dollars and money saved from not going out on stuff.

PREMACK: I bought a blender, this desk and this chair that I'm sitting in right now. Yeah.

SELYUKH: This stuff, she won't buy again for years. And now, like so many people, she's spending mainly on travel, weddings and family visits. And she's trying to save more as prices keep rising.

PREMACK: It's almost as if the retailers and manufacturers were not expecting this.

SELYUKH: Of course, they were, just with varying degrees of success.

MARK MATHEWS: Inventory ordering is an imperfect science at best.

SELYUKH: Mark Mathews is with the National Retail Federation.

MATHEWS: If you think about it, you're ordering goods three, six, even nine months in advance. Retailers base their forecasting on historical behavior, but there is no template for what consumer behavior looks like coming out of a pandemic.

SELYUKH: That means some stores are still facing shortages like canned pet food, for example, but others have a glut of certain items. Gap, for example, said it got stuck with too many fleece hoodies and athleisure right when office workers went back to suits and dresses. But mainly, the mismatch is affecting the big-box stores. Target has publicly said it overstocked on TVs, outdoor furniture, electronics and fitness supplies.

MATHEWS: So maybe we've seen a little bit of over ordering, but we've also seen, you know, maybe not the right assortment.

SELYUKH: What does that mean now? Well, shoppers might see sales on some random items at big-box stores or online. Some goods are going to liquidators or discount stores. But it also means another chaotic year for suppliers like Curtis McGill from the small Texas toy company called Hey Buddy Hey Pal.

CURTIS MCGILL: You could say from being in the toy business this last probably 12 months has not been as much fun as it should be.

SELYUKH: He says many stores are cautious now about placing future orders, partly because of inflation uncertainty but partly because they don't really want to spend on new stuff when they're already spending to store all this old stuff.

MCGILL: As recently as yesterday morning, we had a commitment from one of the larger retailers that was rescinded just completely.

SELYUKH: In the next few weeks, new data will show how long this inventory glut might last, says Jason Miller, who tracks all this at Michigan State University.

JASON MILLER: Now what we're seeing is some initial evidence that the retailers that build up a glut of inventory are starting to get things under control.

SELYUKH: He says last year's shopping frenzy has definitely slowed down, but people are still buying more products than they did before the pandemic. Alina Selyukh, NPR News, Lincoln, Neb.

Copyright © 2022 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.