Christmas season is traditionally the year’s most important shopping season for US retailers. In fact, for many retailers the eight-week window counts for most of their annual sales, and they should be jumping into action, lining their shelves with goods to meet consumer gift-buying demands. But this year, for several reasons, they’re facing some serious hurdles. What are the main glitches?
Typically, by September/October, retailers have filled their inventory and have their shelves lined up with their best-selling items – be it toys, bicycles, or high-end designer clothing. Instead, buyers are going to be horribly disappointed in November/December when they rush out to fill Xmas stockings. It won’t only be that they can’t find the items they want but find sparsely filled shelves.
What’s going on? There is a huge supply chain hiccup of material shortages. Factories are short-staffed, plastic prices are at a record high, and goods are more expensive. Furthermore, there is a scarcity of shipping containers from Asian factories, warehouses, and ports to US fulfilment centers and stores. Given the above, there is not enough time to get products on the shelves.
The Covid delta variant has added to the uncertainty. One of China’s busiest port terminals has closed for two weeks and operations at a third of Vietnam’s textile and garment factories have been put on hold.
Many importers blame Covid on turning supply chains face-down. There is a massive increase in shipping fees and extremely prolonged transit times. Amid virus outbreaks are logjams of cargo at every port and rail yards. The crew-change crisis in the shipping industry has been called a humanitarian crisis as mariners desperately await Covid vaccines after months of being denied leaving their ships and returning home. A Washington Post April article stated that the pandemic had “200,000 merchant sailors stuck at sea.”
Furthermore, the import industry is grappling with staffing shortages with the unparalleled demand for its services, a situation exacerbated when the famed container ship ran aground in the Suez Canal blocking a crucial waterway for nearly a week.
US importers have been scratching their heads for ideas to get their goods to market in time for Christmas. Many retailers urged shoppers to start their buying early, but it takes time to change tradition and consumer habits.
Major US retailers Home Depot and Walmart began chartering their own ships to retrieve products. Walmart is also hiring 20,000 supply chain employees, including order fillers, freight handlers and lift drivers, and creating a new last-mile service to help other companies get orders to customers’ homes.
Amazon has upped its fleet of cargo planes; Urban Outfitters is moving from ocean freight to air to try bypass the clogged ports; and Target is recruiting its own workers to drop off packages.
Before even thinking of how importers will eventually re-stock, merchandise currently making it to warehouses and stores are not making it to buyers’ homes. Delivery is also in crisis due to the supply chain and logistics chaos. Delivery carriers like FedEx and UPS are jostling to hire thousands of package handlers and truck drivers. The US postal service has hinted at plans to employ 40,000 seasonal workers and give 33,000 non-career employees career positions to scale up resources.
Perhaps the worst news of all is that all of this havoc has forced importers to up their prices and offer less discounts – something Christmas shoppers have always counted on. The drop in consumer sentiment and spending plus the inflation – all due to Covid, have not and will not help.
Nevertheless, retailers are basically all in the same boat and it’s sink or swim!