Over the last year and a half, the Trump administration's chaotic approach to tariffs has fundamentally reshaped the way that retailers plan their inventory. But as businesses have prioritized getting ahead of those tariffs, the coming holiday season could prove to be a reckoning for retailers that stocked up months in advance, who may just find that consumers are buying far less than expected.
Prior to President Donald Trump's second term, the business of planning retail inventory was simple: Peak shipping season would span July to October, with the first run of stock ticketed for back-to-school sales at the end of August, and the next for holiday sales in November and December. Today, that process has essentially gone out the window, with the bulk of inventory planning revolving around when tariffs might come into effect, regardless of how long it might be before that stock is supposed to be sold.
“All of these decisions now have to be made months and quarters in advance,” says Marcus Shen, CEO of resale platform B-Stock.
The problem is that sales forecasts get less reliable the further out they go, particularly in a global economy that's become more unpredictable and unstable than ever. It's also one thing to set and ship inventory a couple of months before it's supposed to hit shelves — it's a different beast altogether when you're making decisions in May for a consumer landscape that could be completely different by the time you get to December.
In a 2026 survey of 661 retail inventory management professionals, conducted for ERP provider DOSS, more than half said that they sometimes proceed with demand forecasts that they know are unreliable, simply because no better alternative exists. Another 40% said that they believe more than 10% of their inventory is at risk of becoming unsellable at any given time, while nearly a quarter said that they've been overbuying to avoid stockouts, even while believing that a meaningful share of their inventory could become dead stock.
In a separate DOSS survey of 504 retail decision-makers, 25% said that they accelerated inventory purchases to lock in pricing ahead of planned tariff changes, while 45% reported holding excess inventory longer than planned.
"Retailers are hedging," says DOSS CEO Wiley Jones. "Hold too much [inventory] and you’ve got cash and warehouse space locked up in a product you might have to mark down later. Hold too little and you’re exposed to a stockout if tariffs jump before your next order lands."
When a retailer ends up with more merchandise than it can sell, a few things happen. First, they're forced to cut prices to clear space for new products. And while the goods may still eventually sell, each discount means less profit on those items. At the same time, the retailer has to keep paying to store and handle the products while it waits for sales to come through. If the merchandise is no longer expected to sell for enough to recover its cost, then a retailer must reduce its value on the books and take a hit to its earnings. Seasonal merchandise is especially vulnerable to this, since demand can fall sharply once a holiday has passed.
For the coming holiday season, there are signs that could portend costly overstocks for retailers by the start of next year. Although Bain & Company predicts that U.S. holiday retail sales will grow by 4.5% year-over-year and top $1 trillion for the first time ever, most of that growth can be attributed to rising inflation simply making things more expensive (while failing to account for the raw number of inventory units businesses might be selling).
"Most store types will post growth this holiday season," the firm explains. "But higher prices from inflation account for much of it, so unit growth is thinner than the headline numbers suggest."
Glowing, optimistic predictions about an explosion in holiday sales mask an important distinction between the money a retailer is taking in and the amount of product it's actually moving. Even if a retailer is reporting relatively strong sales, that doesn't mean they won't be stuck holding onto too much inventory later on down the line.
To wit, market research firm Circana found that while August retail sales in the U.S. rose by nearly 1%, unit demand fell by 1.7%, as shoppers focused their spending on the purchases they deemed to be truly essential. Business advisory firm Alix Partners drew similar conclusions in a survey of 15,000 U.S. consumers, which found that despite an expected 4-7% bump in holiday sales for retailers, people are pulling back on spending for individual units across virtually every product category, including apparel, toys and electronics.
This comes as record gas prices have continued to squeeze household budgets, labor force participation has fallen to a five-year low of 61%, credit card delinquencies sit above the 10-year average, and roughly $1 billion less in SNAP benefits reached low-income households in May compared to last year, Bain notes. The result is a far more budget-conscious consumer market than retailers may have accounted for when they were making holiday inventory decisions in the spring.
“They just may not buy at the pace or at the volumes that we may have expected when we were planning for the holiday season even just a handful of quarters ago,” Shen says.
