I understand how shifts in fashion can render existing inventory obsolete creating opportunities to source discounted clothing but for other categories I am beginning to question why so much discounted inventory exists.
Are discount retailers levered to the notion that traditional retailers will always be error prone in their demand forecasts? There are a host of multi-billion dollar businesses reliant upon sourcing inventory from traditional retailers that couldn't sell the items on their shelves.
Do improved data insights & more effective inventory management techniques shrink the overall pool of discounted inventory?
Overall the stock performance of these businesses hasn't been great the last year. To dig deeper one could track inventory trends for each company to see if they have in fact struggled to source inventory. It all seems very counterintuitive to me.
A high level view of how some of the businesses source inventory;
$OLLI - "Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively"
$TJX - "We take advantage of opportunities to acquire merchandise at substantial discounts that regularly arise from the production and flow of inventory in the apparel and home fashions marketplace"
$GO - "Our flexible buying model allows us to offer quality, name-brand opportunistic products at prices generally 40% to 70% below those of conventional retailers"
$BIG - "we purchased approximately 24% of our merchandise, at cost, directly from overseas vendors, including approximately 15% from vendors located in China"