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Surging Retail Inventories Are Swamping U.S. Warehouses

By August 9, 2022No Comments

Retailers and logistics operators are struggling to find space to store the flood of goods that have swamped warehouses and weighed on their balance sheets.



Warehouse owners say more retailers are looking to add storage capacity, both for goods now reaching their networks of stores and distribution centers and as they prepare to keep more inventory on hand long-term to guard against stock-outs.



Prologis Inc., the world’s biggest owner of warehouses by square footage, said in a recent market analysis that it expects an additional 800 million square feet of warehouse space to be needed beyond earlier projections to handle the excess inventories, about 300 million square feet of which has already been leased by tenants.“We have specifically heard from customers who are looking at carrying more inventories and are leasing space,” said Chris Caton, managing director of global strategy and analytics at Prologis.



Retailers including Walmart Inc., Bed Bath & Beyond Inc. and Best Buy Co. have reported they are coping with an unexpected glut of casual clothes, kitchen appliances and electronics as consumers have pivoted away from spending on goods while the highest inflation in decades has crimped household budgets.



Persistent supply-chain bottlenecks have also led many retailers to stretch out buying cycles, bringing in goods early to ensure shelves are stocked during the critical fall sales season. Some retailers have also bulked up orders to be prepared in case of supply-chain disruptions, part of the shift from “just-in-time” inventory management to “just-in-case.”