Stockpiled inventories of big companies like Walmart and Target have become a concern for RMG exporters in Bangladesh as the discounted sales of their products in the US will drastically lower the prices offered by the clients.
According to data compiled by Bloomberg, inventories rose to $44.8 billion for US companies on S&P consumer indexes with a market value of at least $1 billion that reported earnings in May.
As the glut dented profits at some retailers, with Walmart paying more for storage and Target and Gap cutting prices on key goods, they are considering clearing the clutter with hefty discounts.
Economists expected money allocated toward services would outpace merchandise as pandemic concerns subsided, but both categories continued to move upward.
In the US, inflation-adjusted spending on services increased 0.5% in April from the prior month while goods rose 1%.
While that leaves plenty of demand for retailers, consumer tastes are changing.
For example, shoppers spent more on back-to-work apparel and clothing for special occasions, instead of leisurewear and home goods that were popular earlier in the Covid-19 pandemic.
The companies will have to cut prices in slower categories to make room for in-demand items.
Major Bangladeshi RMG clients like Walmart, Macy's and Gap saw 30-40% rise in unsold inventories that the companies are planning to sell with slashed prices.
At present, Walmart possesses inventories worth the highest-ever $62.5 billion. RMG products are a significant portion of this clutter.
