As consumer spending slows and inflationary pressures persist, Canadian retailers are facing a growing challenge: managing excess inventory in a volatile economic environment.
“Retailers are sitting on a lot more stock than usual,” said Alex Hennick, an industry expert who specializes in inventory and product distribution. “Lower consumer spending, driven by inflation and high interest rates, means products just aren’t moving the way they used to. That’s tying up cash flow, increasing warehousing costs, and creating major logistical headaches.”
The issue is especially pronounced for seasonal items, where timing and weather can make or break a season’s sales.
“Here in Toronto, we had a slow start to summer,” explained Hennick of Toronto-based A.D. Hennick & Associates. “So items like patio furniture, trampolines, and barbecues didn’t move as quickly. Retailers often buy these products in the off-season when supply is high, but if the timing is off or the season underperforms, they’re stuck with unsold inventory.”
Excess inventory is more than just a storage issue. It affects everything from liquidity to pricing strategies. Many retailers are being forced to offload products quickly, sometimes at a loss, to avoid the long-term costs of holding unsold goods.
“A furniture company might contact us in August with stock they need to clear before winter,” said Hennick. “Holding that inventory until next summer would cost them more in storage and staffing than it’s worth. In many cases, it’s more cost-effective to take a loss now than to carry the product for another year.”
To clear inventory, retailers are turning to several options:
- Discounting to loyal customers (though this risks devaluing the brand)
- Bulk sales to liquidators or through warehouse events
- Selling to off-price or discount retailers
- Donating surplus products
- Exporting inventory for potential duty drawback claims
“We’re seeing more requests for liquidation and redistribution,” said Hennick. “It’s not just distressed stock anymore. It’s situational inventory. A distributor goes bankrupt, leaves product in a warehouse, and suddenly the warehouse owns goods they don’t want. These kinds of unique deals are becoming more common.”
The economic slowdown in housing is also spilling over into adjacent categories like home décor, blinds, and flooring, where consumer demand has softened significantly.
“People aren’t holding back because of price,” Hennick noted. “They just don’t have the money to spend. That’s where opportunity arises for those who can help retailers recover value from their unsold goods.”
Although a recent federal announcement to remove certain tariffs, originally imposed earlier this year, could ease some pressure on costs, Hennick cautioned retailers not to overreact.
“Yes, tariff removals offer short-term relief,” he said. “But the policy landscape is unpredictable. Tariffs can return mid-shipment, and if you haven’t accounted for that in your pricing strategy, your margins can evaporate.”
His advice for retailers moving forward: order less, plan smarter, and stay nimble.
“Many retailers are still forecasting based on trends from one or two years ago,” he said. “That’s a mistake. Focus on current demand. Build contingency costs into every decision. And above all, work closely with suppliers, customers, and logistics teams to ensure everyone’s on the same page.”
Timing, he added, is everything, especially when it comes to seasonal products.
“If your swimsuits show up in August, you’ve missed the window,” said Hennick. “Now you’ve got a warehouse full of unsold goods and zero opportunity to move them until next year.”
Ultimately, Hennick believes proactive planning and strategic relationships will be key to surviving the current retail environment.
“Someone will always have to absorb the cost,” he said. “But if the burden falls too heavily on one party, that business won’t last. The ones that survive will be those who adapt quickly, communicate well, and make decisions based on today, not yesterday.”
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