Modern Shipper reports that Walmart is canceling "billions of dollars in orders" as it works "to align inventory levels with projected demand and to reduce its exposure to certain products that have fallen out of favor with budget-conscious consumers."
According to the story, "Walmart executives said the company has cleared out most of its summer seasonal inventory ahead of the back-to-school season - which has begun in large parts of the South - and the upcoming holiday period. Executives said the company is making progress right-sizing its inventories, but that it will take at least a couple more quarters to wring the imbalances out of its network."
Modern Shipper goes on to point out that "Walmart’s seasonally adjusted days to turn inventory declined to 44 days in the second quarter from 46 in the prior quarter, according to data from Michigan State University. That signals that sales are starting to outpace order arrivals, according to Jason Miller, associate professor of logistics at the university’s Eli Broad College of Business."
- KC's View:
I'm sure this is going to be an enormous problem for these suppliers, and that their bottom lines are going to take a hit. I'm not sure that Walmart had any alternative, though … as I've said, it is in these circumstances that Walmart has the power and resources to be really, really dangerous.