Supply chain concerns are on the rise


For nearly 18 months, supply chain issues have been at the center of retailers’ concerns – and despite millions of dollars invested to boost overseas manufacturing and ease shipping congestion, the spread of COVID-19 and its variations continues to wreak havoc as retailers prepare for the holiday shopping season.

Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation (NRF), said it is likely that these issues could remain a challenge as the holidays approach. While consumers are busy stocking up for back to class and college, retailers are increasingly scrambling to ensure they can meet the looming demand of a long shopping season. celebrations.

Last month, Salesforce predicted logistics challenges could pose a second-half $ 223 billion retail problem, with manufacturers adding $ 12 billion due to continued risk of COVID-19, stores adding $ 48 billion due to a severe shortage of employees, and logistics companies adding $ 163 billion to make up for a shortage of shipping containers and capacity on ships.

Read more: Retailers ready for another unprecedented holiday season

Ben hackett, founder of international trade consultancy Hackett Associates, said last week that part of the problem was pressure from the expanding US economy, which is putting “considerable strain on the logistics supply chain.”

“We are seeing a lack of shipping capacity combined with port congestion as ships line up to unload cargo from Asia and Europe,” Hackett said in a statement, noting that delays are starting to sink in. ” expand on the city side while the port terminals are grappling with a space shortage. “This part of the recovery is not a pretty sight, and the blame is spread like butter,” Hackett added.

Some companies such as Amazon and Walmart have pre-purchased shipping containers ahead of the holiday season, and Home Depot rents its own freighters. “Retailers are really starting to get their hair done, really trying to get creative,” noted Rob garf, vice president and general manager of retail at Salesforce.

Children’s clothing retailer Carter’s, for example, is spending “several years of air freight” due to production delays, CFO Richard Westenberger said in July. “The increases that we are seeing in ocean freight, these may linger with us for quite some time, certainly until 2022,” he told analysts and investors on a conference call.

Looking for manpower

A big part of the problem for retailers and logistics companies is finding enough people to work. As of February 2020, retail employment has fallen by 270,000. The transportation and warehousing sectors have mostly recovered the 575,000 jobs lost during the February-April 2020 recession caused by COVID- 19, warehousing and storage companies adding nearly 11,000 jobs in July.

Yet in June – according to the latest data available from the United States Bureau of Labor Statistics – 1.2 million retail jobs remain vacant, as do 460,000 jobs in transportation, warehousing and services. public.

Walmart is reportedly offering its warehouse workers weekly bonuses for postponing the vacation this month, as the company’s 190 distribution facilities see high volume of activity in preparation for the vacation. Depending on the location and type of job, bonuses range from $ 200 per week to $ 500 per week.

Companies are also working to attract workers to the front lines of retail. Target, for example, last week partnered with the education and development platform Guild Education to provide debt-free education assistance to employees; Walmart took a similar move last month, saying it will pay 100 percent for tuition and books as part of its Live Better U program.

CVS Health is also increasing its minimum hourly wage to $ 15 an hour and removing training requirements for hiring entry-level employees.

To see: CVS Increases Hourly Wages Of Its Employees To Address Labor Shortage

“Obviously the job market is tight and we’re paying attention,” CEO Karen Lynch told analysts and investors on CVS’s quarterly earnings conference call. “We have a lot of hiring to do to support growth, and we see the pressure, but we are doing it.”

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