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Coal in stock: US retailers scramble ahead of holiday season

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New York (AFP)

With the pandemic continuing, American homes could face a meager holiday season, forced to do without some of their favorite items missing from store shelves.

Even as demand grows with the reopening of the world’s largest economy, U.S. retailers are working hard to avoid putting the brakes on the festivities, taking unprecedented steps to try and circumvent the myriad of chain hurdles. supply.

The most dramatic steps have included steps taken by Walmart and other big box chains to charter their own ships and bypass annoying delays at west coast ports.

Other workarounds have included importing imports earlier in the season, launching holiday promotions earlier, and switching to air freight from ships.

“Many companies have made the decision over the past 30 days that ‘we need to change the mode’,” said Neel Jones Shah, global air freight manager at Flexport, a freight forwarding company.

“They have to pivot to broadcast or they’ll miss their sales season all together.”

But even with these metrics, Scott Case, a logistics industry veteran and founder of Chicago-based Position: Global, predicted “that there will be noticeable gaps in what is available to people this season. holidays”.

Retailers are also trying to plan for this, strategizing to allay or cushion disappointment when premium items run out.

– ‘Monumental shortages’ –

On the positive side, consumer activity remains robust, a dynamic apparent in US retail sales data released on Friday, which showed another surprising gain in September.

“It’s going to be a good holiday season from a demand perspective,” said Neil Saunders, managing director of GlobalData Retail, who expects businesses to offer fewer promotions to attract shoppers than they do. have done in the past due to tight supply.

In addition to the backlog at ports, which has seen ships lining up waiting to unload their containers, retailers face manufacturing outages at key factories in Asia where local governments have imposed closures due to of Covid-19.

They also face a shortage of frontline workers, which could make it difficult to hire a sufficient number of seasonal workers.

These supply chain bottlenecks were the focus of attention by finance ministers meeting last week in Washington.

In view of the problems at the ports, more and more retailers are turning to air freight this year MEGAN JELINGER AFP / File

And at the White House, President Joe Biden announced a commitment from the Port of Los Angeles to work 24 hours a day.

Building on publicity surrounding the issue, shopping groups like the National Retail Federation have urged consumers to shop early this season.

But even so, “there are going to be monumental shortages,” said Terry Esper, professor of logistics at Fisher College of Business at Ohio State University.

Retailers are going to have to resort to “demand shaping,” where they direct consumers to in-stock or substitute products, sometimes with a higher value option. For example, a customer who wants a wool sweater may be offered a cashmere sweater instead.

Companies are diversifying their suppliers and moving from “just-in-time” inventory management to “just-in-case” inventory management, said Esper, who also expects greater use of automation in the future. light of the labor shortage.

“The projections are that it’s going to be a tight squeeze until 2023,” Esper said. “It’s not a vacation problem. It’s a transition to a different business model.”

– Higher prices to come? –

Squeezing the capacity of everything from warehouses to cargo planes also adds costs, which already tend to rise due to higher wages. Estimates vary, but industry officials have complained about ocean freight prices up to 10 times their pre-pandemic level.

And soaring oil prices led Delta Air Lines to warn this week that rising jet fuel costs could lead to an unprofitable fourth quarter.

Transportation Secretary Pete Buttigieg chats with Mario Cordero, executive director of Port Long Beach, and Gene Seroka, executive director of Port of Los Angeles, during a meeting at the White House this week
Transportation Secretary Pete Buttigieg chats with Mario Cordero, executive director of Port Long Beach, and Gene Seroka, executive director of Port of Los Angeles, during a meeting at the White House this week Drew Angerer GETTY IMAGES NORTH AMERICA / AFP / File

GlobalData’s Saunders expects some inflation, but said in the “extremely competitive” retail industry, “companies must be careful not to pass it on for fear of losing market share.”

At Rickenbacker International Airport in Ohio, Bryan Schreiber, director of air cargo business development, said he was surprised he hadn’t seen a bigger rise in prices.

“Maybe companies are trying to limit the costs they pass on to consumers,” he told AFP. “But I think in the end for a lot of things – if you can get it – it’s going to get a lot more expensive.”