Retailer orders hit astonishing record low, with home furnishings at “elevated risk”


New York – The volume of retail orders has fallen to a sobering pace as major retailers continue to unload excess inventory.

The chasm between inventory levels and sales growth is running at 19%, according to the most recent Morgan Stanley Shipper Survey. Net ordering levels have fallen to the lowest point in the survey’s 12-year history, down 40% year over year, Freight Waves reported in its review of the report.

The periodic survey polls roughly 100 companies about their transportation expectations. Nearly half the respondents in the most recent report indicated they were still in a de-stocking posture and that their ordering is still low.

Macy's sheet display

Thinly stocked shelves at Macy’s reflect the extent to which retailers are holding back on flowing replenishment merchandise.

Morgan Stanley pointed to Williams-Sonoma as well as Gap and Best Buy has among those with the highest inventory risks, and named Ross, Burlington Stores and TJX Cos. as among those best poised to benefit from the current environment.

Home furnishings were said to be at “an elevated risk” while the report described the situation with apparel imports as “alarming.”

For the first eight months of 2022, imports of cotton sheets were down nearly 10% year-over-year on a volume basis and imports of sheets containing man-made fiber (MMF) were down nearly 21%, according to the U.S. Office of Textiles and Apparel (Otexa).

Imports of cotton terry and other pile towels was down 8% in unit volume and imports of MMF curtains were down 23%.

“Faced with a glut of inventory, companies will need to decide whether they want to accept high costs to continue holding inventory, destroy inventory, keep prices high and take a hit on the number of units sold, or slash prices to stimulate demand,” Freight Wave reported Morgan Stanley advising. “We believe many will turn to aggressive discounting to solve their inventory problem, which is likely to spark a ‘race to the bottom’ as companies attempt to cut prices faster than peers and move out as much inventory as possible. This dynamic will weigh heavily on margins and fuel the earnings slowdown we are predicting.”

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