Go Big Or Go Home: Largest Retailers’ Moves To Stay Stocked And Dodge Supply Chain Snarls Pay Off
An investment in strategies to offset supply chain challenges ahead of the holiday shopping season appears to have paid off for large retailers.
Executives at the nation’s largest retail chains, including Walmart, Target, Macy’s and TJX Cos., say they have stocked shelves for holiday shoppers, some with even more product than last year.
Target said in its third-quarter earnings that inventory is up nearly 18% compared to last year, while TJX — which owns several discount retailers, including T.J. Maxx, Marshalls and HomeGoods — said it had $6.6B in inventory at the end of October, up from $6.3B last year.
“We are in an excellent inventory position, with most of the product needed for the holiday season either on hand or scheduled to arrive at our stores and online in time for the holidays,” Target CEO Brian Cornell said in a media call, according to The Wall Street Journal.
Retailers and other logistics players are fighting against shipping logjams caused by record volume at ports across the nation. Target, along with Walmart, Home Depot and Costco, took drastic steps to stock shelves, buying as much as possible in advance and, perhaps most notably, chartering their own cargo ships to import goods.
Small retailers unable to front the high costs of this tactic aren't faring as well heading into the holiday season. Podzly LLC, a small Nebraska retailer, told the Wall Street Journal it has about half the inventory it would like because of shipping delays and is paying about 55% more for products than it did in 2019.
In addition to exceeding market estimates for third-quarter sales, Macy’s and Kohl’s Corp. on Thursday raised their full-year profit outlook as a result of increased inventory and optimism ahead of the shopping season, according to Reuters.
“I don’t think that all supply chain problems have been fixed, but Macy’s raised guidance could put people at ease that there will be enough product,” Empire Financial Research analyst Berna Barshay told Reuters.
The retail sector is facing pent-up demand, exacerbating supply chain woes. This year, holiday spending has the potential to break records, according to the National Retail Federation, which predicts sales may jump 10.5% during November and December when compared with 2020.
The U.S. Postal Service, meanwhile, is planning 45 new distribution centers on short-term leases to increase its package delivery capacity and meet demand for this holiday season.
