Discounts Harder to Find Amid Supply Chain Bottleneck
The traditional discounts and specials related to the holiday season will be fewer and further between this year as shoppers are likely to pay close to full price on just about everything on their holiday lists this year, according to a report Monday (Oct. 25) in The Wall Street Journal.
Supply chain snafus and inflation are working against shoppers this year to keep prices higher than they might be during the peak of the holiday rush, spurred by the feeling of what WSJ calls “newfound pricing power” for retailers amid increasing stock shortages.
Out-of-stock messages are up 172% from January 2020, according to Adobe, Inc., which tracks 18 categories, led by apparel, sporting goods, baby products and electronics, the WSJ report says.
Walmart Inc., Costco Wholesale Corp. and Home Depot told WSJ the lack of inventory has made it easier for them to keep prices higher because shoppers are willing to pay more with the supply lower.
The supply chain bottleneck is the main culprit behind product shortages, but some brands were already thinking about ways to maximize their profits before the COVID-19 pandemic, including by reducing their stock and by creating more targeted promotions.
Related: Retailers Outline Supply Chain Strategies in Bid to Win Customers
The supply chain slowdown will continue to be a concern for retailers into the holiday shopping season — and likely beyond.
Walmart U.S. executive vice president of supply chain operations Joe Metzger says the company is chartering ships and diverting shipments to less congested ports; hiring thousands of supply chain workers and truck drivers; and rerouting inland shipments “utilizing less conventional transportation methods” to avoid rail delays.
Target has added four new sortation centers and two new distributions centers and is hiring 30,000 new year-round supply chain employees.
Both companies have also committed to moving more goods at night. President Joe Biden said the Port of Los Angeles would start processing ships 24 hours per day, seven days a week with more than 60 container ships waiting to unload their freight.
Executives at Nike, meanwhile, are increasingly relying on air transportation as transit times from China to North America double from pre-pandemic levels. American Shipper has reported that the rent on a 747 freighter for a flight from China to Chicago is now $1.5 million to $2 million, up from about $500,000 two years ago.