Retailers Suffer From Inventory Bloat as US Consumers End Two-Year Spree

US retailers that stockpiled goods to cushion against supply-chain snarls are finding inventory reduction to be challenging and costly as American households start to pull back from a two-year spending spree.

With persistently hot inflation and the Federal Reserve raising interest rates, Walmart Inc., Target Corp. and others are seeing consumer preferences shift to basic goods including food and home essentials. At the same time, shoppers are putting the brakes on purchases of furniture and electronics compared with a year ago, Commerce Department data released Wednesday showed.

Such shifts in spending behavior -- when combined with over-ordering earlier this year -- have left the people who manage supply chains with a costly mess. Products that don’t entice shoppers sit unsold in stores and warehouses, taking up valuable space. That’s why big retailers have been working so hard, and paying such a high price, to get rid of slow-selling discretionary items.