How the Delta variant stole Christmas: empty shelves, long waits – and yes, higher prices
Growing challenges – including factory closures, computer chip shortages and clogged ports – rock the industry as it prepares for the crucial holiday shopping season, an eight-week window that can represent more than half of a retailer’s annual sales.
The rapid spread of the Delta variant adds to the uncertainty: it has already forced the closure of a terminal in one of China’s busiest ports for two weeks and halted the operations of a third of the garment factories and of textiles from Vietnam. And there are signs that consumers are pulling back. Retail sales took a hit in July, with Americans spending less on clothing, cars and furniture as Delta took hold.
The Biden administration has signaled that smoothing the supply chain is an increasing priority. Last week, the White House appointed a port envoy to tackle congestion at U.S. ports, while the recent bipartisan infrastructure deal includes $ 17 billion in port infrastructure investments.
But those efforts are unlikely to provide much breathing space before the next busy season. Analysts say they expect widespread shortages, less selection and higher prices for a number of popular holiday gifts, including game consoles, TVs, toys and sneakers.
“COVID has disrupted supply chains,” said Neel Jones Shah, global head of air cargo for Flexport, a logistics technology company. “We are seeing an astronomical increase in shipping rates, a dramatic increase in transit times and a bottleneck of goods in every port. Shippers are scrambling to figure out how to get their goods to market in time for the Christmas sales season. ”
Two of the nation’s largest retailers, Walmart and Home Depot, are chartering their own ships to collect their goods as Amazon bolsters its fleet of cargo planes. Urban Outfitters is switching from ocean freight to air freight in hopes of bypassing clogged ports as the holidays approach. (Amazon founder Jeff Bezos owns The Washington Post.)
Other brands are recalibrating to avoid the frenzy: Book publishers, plagued by paper shortages and shipping delays, are pushing back fall releases to early next year.
“Everyone is in the same boat, saying, ‘How do we ensure a supply of goods? What is the most critical? What can we do without? ” ‘Said Robert Gerwig, senior vice president of distribution and logistics at Sweetwater, which sells musical instruments and audio technology. “They are quickly looking for other options to make sure the goods are delivered on time.”
With weeks before summer falls into fall, store shelves are already scarce: at Walmart and Williams-Sonoma, executives say more items are out of stock than usual. Clothing chain Anthropologie is running out of dresses and jeans. Many retailers are reducing their stocks of toys and clothing, offering fewer styles, colors and sizes, according to Nikki Baird, vice president of innovation at retail software provider Aptos.
“There is still so much in the air, and the larger your assortment, the more risky it is to go wrong,” she said. “The easiest way to respond to inventory risk is to narrow down your options so that you can focus your risk to some extent. “
Everlane, who has built his clothing brand around ethical products, focuses on classics like sweaters and jeans for the holidays. Even so, complications from COVID are delaying orders for weeks or even months, according to product manager Erika Edelson.
“The ports are congested … sometimes even causing boats to run aground on the water,” she said. “Once our products run out, it may take weeks or months before we can restock.”
The time it takes to ship an item from Asia to the United States roughly doubled – 15 days by air, 90 by sea – during the pandemic, Shah said. The backlog, coupled with labor shortages and pandemic-related closures every step of the way, has resulted in months of waiting for electronics, furniture and other imports.
Such delays, analysts say, are expected to increase in the coming weeks. Cargo volume at the Port of Los Angeles, the nation’s largest port, has increased for 12 consecutive months.
“This remarkable and sustained increase in imports is pushing the supply chain to new levels,” said Gene Seroka, executive director of the port.
Even after merchandise has arrived in stores and warehouses, getting it to consumers’ homes will be an ongoing challenge. Carriers like UPS and FedEx scramble to hire thousands of truck drivers and package handlers. The US Postal Service has announced plans to hire 40,000 seasonal workers and convert 33,000 non-career workers to career status in order to build capacity.
The holiday season produced recurring nightmares for the postal agency last year: the November elections, in which nearly half of the country’s voters voted by mail, combined with a labor force to severe test under the COVID era parcel volumes erased the entire postal service network.
Employee availability has plummeted and has led to parcel bins clogging the aisles of sorting centers. Foods and temperature sensitive items spoiled when they sat late; postal workers complained about the swarming of flies on packages and the smell of rotten materials. Nine large sorting facilities either turned down mail items at the height of the season or tried to divert them to other factories, according to an inspector general report. Dozens of postal customers said they received holiday mail through April.
This year, retailers are developing contingency plans, finding local and regional alternatives to national carriers and, in some cases, developing their own delivery capabilities. Target uses its own employees to drop off packages, and Walmart is creating a new last mile service that will help other businesses get orders to customers’ homes.