Wal-Mart Giving Mixed Signals as They Cut Back on Supplier Orders While Inventories Pile Up

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Is the retail giant losing customer sales? Or maybe they’re just cutting back on general merchandise orders to make room for holiday items? Perhaps they simply lack the staff to get all the inventory out of the back storage room and onto the floors and shelves? Whatever the reason, the fact is Wal-Mart has sent out an email to its suppliers notifying them that the retailer is cutting back on orders two months in advance, showing some of the most aggressive order cuts that have been seen by the retailer in recent years, according to Cleveland Research. Bloomberg received a copy of an email from one of Wal-Mart’s suppliers which indicated that inventories were growing faster than consumer demand, and the retailer was therefore reducing the quantity of their orders over the course of the next two months. The supplier who showed the email to Bloomberg did not wish to be identified, according to Supply Chain Digest.

Quarter two inventories at Wal-Mart stores were up 6.9 percent, while U.S. sales grew just two percent. Reports are coming out of stores that back rooms, and in some cases shipping containers outside the stores in the parking lots, are overflowing with unsold merchandise. Wal-Mart spokesperson David Tovar maintains that the retailer carries so many categories of inventory that it’s constantly vamping up and slowing down orders in response to fluctuating consumer demands.

One theory is the stores are backing off on orders of general merchandise over the next couple of months to keep space in stock rooms and on shelves for incoming holiday merchandise. Wal-Mart began putting out Christmas trees and other holiday items about one month earlier than usual, according to workers in some of their stores.

Consumer sales maybe lower than expected or  shoppers maybe buying elsewhere. Wal-Mart has drastically changed their stores in recent years, removing much of the low-end merchandise customers depended on. The full story may not come out until after the holiday season, when things in the retail business begin to normalize.

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