‘Retail Vortex’: How Deepening Discounts And Thinning Profit Margins Could Take Their Toll This Holiday Season
The so-called “retail apocalypse” has become a blanket phrase for the industry’s woes, which so far have resulted in more than 50 bankruptcies and 21,000 store closures since 2017. Now some analysts are warning of a “retail vortex.” A mix of thinning profits, soaring returns and ever-growing markdowns puts already-struggling retailers at risk of further decline this holiday season, according to DynamicAction, a retail software firm that analyzed more than $11.6 billion in online transactions from January to September. The company defines retail vortex as a post-holiday period of deepening discounts and thinning profits, as retailers try to unload piles of unsold inventory to a diminishing pool of customers. As a result, retailers end up absorbing higher costs related to marketing, logistics and returns, eroding already-shrinking profits. Last year, for example, holiday returns rose 26 percent in the three weeks after Christmas from the year before, according to DynamicAction, a number that is expected to rise this year. Read more at The Washington Post.
