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The chaotic story of inventory in today’s economy

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Masked customers shop in a Target store in California.

Target is among the retailers that misjudged what consumers would buy and are dealing with stockpiles of unwanted goods. Justin Sullivan/Getty Images

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What to put on store shelves and how much of it to put there is a hot topic in today’s economy. And it’s tied to what we — consumers — are doing with our money.

The Census Bureau on Wednesday released data showing that inventories at the wholesale level were increasing in March and April, meaning that stuff was starting to accumulate in warehouses and on shelves. 

We know, in retrospect, that that became a problem for retailers like Target. But Target isn’t the only story here. 

The story of what to put on shelves has a lot of different versions right now. Here’s one: A little while ago, we were stuck inside, we bought a bunch of stuff, and now we’re free and spending our money on other things, which means some stores have a bunch of stuff nobody wants. 

“Some firms have simply misjudged the pullback of the consumer and are facing unexpected or even unwelcome stockpiles of goods,” explained Lindsey Piegza, chief economist at Stifel Financial. 

That’s a story called Target. “Target doesn’t want any more patio furniture,” Piegza said.

Another story goes like this: People don’t like rising prices, so they try to find ways around them.   

“If beef prices are high, you shift your spending to chicken,” said Tim Quinlan, a senior economist with Wells Fargo.

The name of that story is Walmart or Canceling Your Netflix. Stephen Bethel is seeing these stories firsthand. He works for Frazier Capital, which assigns valuations to companies.

“Rising inventories are sort of an easy way to go bankrupt,” Bethel said. “The balance sheets we’re seeing are starting to see some of these issues.”

But that’s just some businesses. Other businesses are still telling an older story, from the peak of the pandemic. Which is: They can’t refill their shelves fast enough, so they want more inventory. 

“We are seeing for some businesses a backlog of orders, and supply chain disruptions are still lingering,” Piegza said.

So the ultimate story of who is putting what on which shelf across our economy is chaotic right now. And that is because our spending is also chaotic.  

Some consumers are cutting back, but others are still spending a lot — especially, for example, on airfare and hotels. So deciding what to put on the shelf and what will sell over the next few months isn’t so much a story as it is a riddle. 

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