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.

Walmart (WMT), Target (TGT), Amazon (AMZN) and other leading chains have huge advantages over small businesses and family-owned stores and can avoid the problems of today’s high costs and provide a rare setup. These retail giants are going out of their way during this holiday season to stockpile merchandise, keep prices low for customers, and gain an edge over their competition. And it’s likely that by the end of the season, the divide between America’s biggest and smallest stores will have widened, retail analysts and supply chain experts predict.

“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.

This year, Walmart, Target and Home deposit (HD) chartered their own ships to bring in containers from overseas and deliver them to ports of their choice – bypassing port bottlenecks faced by other shippers. They also carry more cargo by air than in previous years. These options are overpriced and inaccessible for most independent stores and even mid-sized businesses.

“The fact that large retailers are in a better position is no surprise,” Goldsby said.

Store

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.

Walmart’s inventory levels rose 11.5% in its most recent quarter from a year ago, the company said on Tuesday. “Three years ago if we had said our inventory is up 11% I wouldn’t have been very happy, but now we’ve announced it in a headline because it shows we’re ready for the holidays. “said Brett Biggs, chief financial officer of Walmart. an interview with the Wall Street Journal.

At Home Depot, inventories were up 27.4% last quarter compared to 2020.

Here's why groceries are getting more and more expensive

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.

According to a recent poll by the National Federation of Independent Businesses, a lobby group for small businesses, 39% of small business owners said in October that supply chain disruptions have had a significant impact on their business. Another 29% reported moderate impact. Only 10% reported no impact from supply chain disruptions.

“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.

Meanwhile, companies like Walmart and Target are hiring hundreds of thousands of workers over the holidays, and they say they don’t have a lot of trouble filling jobs.

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.


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