Edit: This question attracted way more interest than I hoped for! I will need some time to go through the comments in the next days, thanks for your efforts everyone. One thing I could grasp from the answers already - it seems to be complicated. There is no one fits all answer.
Under capitalism, it seems companies always need to grow bigger. Why can’t they just say, okay, we have 100 employees and produce a nice product for a specific market and that’s fine?
Or is this only a US megacorp thing where they need to grow to satisfy their shareholders?
Let’s ignore that most of the times the small companies get bought by the large ones.
Inflation, but also scale of manufacturing and tooling.
I was a Buyer for a chain of bike shops. You will not buy the same stuff forever. Continuous manufacturing is also generally much more expensive. Most cheap modern goods are made through contract manufacturing. That creates the cycle of seasonal products. Even something like cars involves a tooling cycle where the same stuff cannot be made indefinitely; the tools wear out with time. The market saturates with any given design. All people do not want to drive a Toyota Corolla from 1992 in beige.