Target’s Inventory Issue
Target’s CEO surprised some investors on Tuesday when he said the retailer would report lower profits this quarter because it will move to quickly shed excess inventory due to shifting buying patterns.
The news came less than three weeks after Target reported lower-than-expected profits, partly due to the cost of managing bloated inventory. Now the company will quickly cancel orders or sell products at a discount during the current quarter, eating further into profits.
During the pandemic, shoppers flocked to new services Target began offering, to buy online and pick up in-store parking lots or receive home delivery. Customers bought more furniture, outdoor gear, and food to cook at home than before the pandemic. As a result, Target added over $25 billion to annual revenue over two years of the pandemic.
Now, Target execs are watching consumers’ behavior as they face high rates of inflation and retailers face high inventory levels. Shoppers aren’t buying as many pandemic favorites such as patio furniture and small kitchen appliances instead of spending on food and entertainment. Some items arrived late after shipping delays, and consumer demand has changed during this time.
Target and other retailers need to take these necessary (albeit painful) losses to adjust to the changing consumer environment to address short-term obstacles, but it would be wise for them to keep their long-term strategies (serving shoppers in stores and digitally with their own differentiated assortment of merchandise) in place.
Running Up the Charts
English singer-songwriter Kate Bush just broke into the Billboard Top 10 for the first time — with a song she released four decades ago. “Running Up That Hill (A Deal With God)” peaked in the No. 30 spot on the Billboard Hot 100 when it came out in 1985.
It’s now having a major renaissance thanks to Stranger Things, the 1980s-based sci-fi hit whose fourth season premiered on Netflix late last month. And it caught on quickly, topping the iTunes chart within two days and posting an 8,700% increase in global streams over the course of one weekend.
By last Tuesday, the song had reached the Top 10 in 34 countries — including the U.S., Germany, Norway, and New Zealand — and the No. 2 spot in nearly a dozen of them, including the U.K., Canada, Australia, and Saudi Arabia. This week, it re-entered the Billboard Hot 100 singles chart at No. 8., making it Bush’s first U.S. Top 10 single. As of Tuesday, it’s the second most-played song globally on Spotify and Apple News, according to The Guardian.
Even though it is rare for older songs to burst back into the Top 10 years later, using older songs in social media posts, as well as in popular TV shows and movies, can make this happen as long as the song is relevant to the storyline/plotline/purpose of the post. Song-story “matches” can breathe new life into previously popular music.