Walmart is slashing prices and offering discounts on apparel and other items to reduce a surplus as consumers spend more for food and gasoline amid rising inflation.
“The increasing levels of food and fuel inflation are affecting how customers spend … apparel in Walmart U.S. is requiring more markdown dollars,” CEO Doug McMillon said in a press release.
Employees and managers point to more than just inflation for their crowded inventory. They say Walmart’s automatic inventory system is to blame.
“We have hit a terrible point where the system auto-orders more of the stuff we already have,” an employee in Minnesota told Business Insider.
A vicious cycle has ensued: Employees are unable to label new goods fast enough, so the automated system doesn’t count them as part of the inventory and orders more of the same goods.
“If something doesn’t make it out to the shelf in 24-48 hours, the system will zero it out, then the ordering system will see we’re out and then order more merchandise,” a Walmart manager in Texas told Business Insider.
“Honestly, if they stopped sending general merchandise trucks for a week, we may be able to dig ourselves out,” the Minnesota employee said.
The Minnesota employee also noted the stop-gap fix for the problem: renting out storage containers for overflow items.
“My store and a few other stores in the area have had to rent shipping containers to store all this extra stuff until we can get some kind of control over it,” the employee said, according to Business Insider.
A leaked internal memo from Saturday suggests that Walmart is allowing a temporary easing of the inventory system, called ISA within the company.
Business Insider, which obtained the leaked memo, cited it as saying that “managers can decide to keep ISA on, turn ISA off for general merchandise but keep it on for food and consumables, or turn off ISA completely.”