Tackle retailers in for tough holiday season

Fishing tackle shops in the US may be in for a tough holiday season if they follow the trends of mainstream retailers, reports news agency Reuters.

But it could present an opportunity for consumers to grab bargain purchases over the next six weeks.

Major US retailers face the prospect of being burdened with too much stock for the second year running, threatening profit margins and creating steep discounts for shoppers.

As the year’s biggest shopping period approaches, LSEG Workspace – a financial news and data platform – has calculated inventory turnover ratios of 30 major US retailers to determine which are most vulnerable to carrying excess stock, which raises retailers’ costs. Its findings show inventory levels are still high.

“Stuffed stockrooms are especially challenging for retailers this year because American shoppers are expected to spend just three to four per cent more this season, roughly on par with inflation,” writes Ananya Mariam Rajesh for Thomson Reuters. “That would represent the slowest pace of growth in five years, according to industry estimates.”

Retail consultant and former Target Vice Chairman, Gerald Storch, is ‘relatively pessimistic’ about the holiday season, saying that some retailers could be overly optimistic and make the mistake of buying too much yet again.

Inventory surfeits hit many retailers’ profits last year when consumers avoided discretionary purchases because of high inflation. Resorting to discounting can help move product, but will result in declining margins.

Some cut prices to clear excess inventory before Black Friday on November 24th, seen as the start of the holiday shopping season.

Early discounting is driven by the fear that consumer spending could be weaker by the end of the year, Brian Mulberry at Zacks Investment Management, the owner of Walmart, told Reuters.

Fishing tackle retailers will be hoping that consumer behaviour in previous periods of a depressed economy will be repeated, with anglers continuing to spend on consumables as their desire to be on the water remains strong.