How to Find Lower Prices and Avoid Empty Shelves During the Great Supply Chain Crisis
But there’s good news for shoppers looking to avoid empty shelves and high prices: Products can be found – and cheap. You just need to know where to shop.
The most dominant US chains expect to be fully stocked with merchandise – at rock bottom prices – for most items this season.
Here’s how they beat their rivals.
“Large retailers should be better able to handle supply chain issues and have better inventory than small retailers without muscle,” said Michael Baker, retail analyst at DA Davidson, in a note to customers this week.
Large chains have long-term supplier relationships and purchasing power to convince suppliers to prioritize them when shortages occur, said Thomas Goldsby, Haslam Chair in Logistics at the University of Tennessee -Knoxville, in an email. They entered into contracts with suppliers and entered into agreements with logistics providers and carriers long before the supply chain crisis, unlike smaller players who do not have the financial capacity or the size to sign contracts. several years.
“The fact that large retailers are in a better position is no surprise,” Goldsby said.
Many stores are struggling to secure goods due to shortages of raw materials, skyrocketing shipping container costs, delays at key ports, lack of truck drivers and other factors. But inventory levels have swelled by more than $ 10 billion combined at Walmart, Target and Home Depot as the holidays approach. These chains say they are in great shape.
At Home Depot, inventories were up 27.4% last quarter compared to 2020.
Home Depot’s scale has helped it secure goods against its competition, Edward Decker, chief operating officer of the company, said on Tuesday. Some vendors with limited supplies have even told Home Depot that they are prioritizing them, “” We can’t serve the industry, so we prefer to focus on the best partner, “Decker told the vendors.
Target’s inventory levels rose 17.7% in the last quarter, the company said on Wednesday. Target is “well positioned” on key holiday products such as toys and gifts to celebrate the holidays, Target COO John Mulligan said Wednesday. This will help Target “continue to gain market share over the holiday season”.
Amazon has also “done a good job of lining up larger-than-normal inventory commitments,” CFO Brian Olsavksy said on a call with analysts last month. Amazon is using more containers and importing goods into new U.S. ports to avoid clogged West Coast entrances.
Go on hiring
While large chains stock up on merchandise, the situation is quite different for smaller stores.
“One of the biggest problems for small businesses is the shortage of workers for vacancies and shortages of inventory, which will continue to be a problem during the holiday season,” said the chief economist of the NFIB, Bill Dunkelberg.
Eat in your profit
Additionally, smaller stores generally have less financial flexibility to absorb higher costs and keep prices low for customers than larger competitors.
Walmart and Target, however, say they are raising prices at a slower rate than their competitors. While this hurts their profit margins, they’re betting the strategy will help them win over budget-conscious consumers looking for lowest-priced stores as rising inflation squeezes their wallets.
Walmart, for example, has said its price differentials with its competitors are larger than they were before the pandemic, as the company absorbs some costs instead of passing them on to customers.
“Our price differentials are where we want them,” Walmart CEO Doug McMillon said on a call with analysts Tuesday.
This could help Walmart gain market share over the holidays and into 2022 with more customers looking to switch to cheaper stores.
Seventeen percent of shoppers said they plan to shop at different retailers if prices continue to rise, according to an online survey of more than 14,000 shoppers in September by the research firm of Numerator consumption.