How to find lower prices and avoid empty shelves during the great crisis in the supply chain

But there is good news for shoppers who want to avoid empty shelves and high prices: Products can be found – and cheaply. You just have to know where to shop.

America’s most dominant chains expect to be stocked with goods – at great prices – for most goods this season.

Here’s how they beat rivals.

Walmart (WMT), Goal (TGT), Amazon (AMZN) and other top chains have huge advantages over smaller businesses and mom-and-pop stores and can circumvent problems in the current high-cost, supply-tight setup. These retail giants do everything to store goods, keep prices down for customers and gain an advantage over competitors. And it’s likely that the gap between America’s largest stores and its smallest will have widened by the end of the season, retail analysts and supply chain experts predict.

“Larger retailers should be more able to navigate supply chain problems and have better stocks than smaller retailers without the muscles,” said Michael Baker, retail analyst at DA Davidson, in a note to customers this week.

Americans drop knock-off brands: Pampers and Hefty are back

Top chains have long-term relationships with suppliers and the purchasing power to convince suppliers to give them first priority when there is a shortage, said Thomas Goldsby, Haslam Chair in Logistics at the University of Tennessee-Knoxville, in an email. They have locked contracts with suppliers and entered into agreements with logistics providers and carriers well in advance of the supply chain crisis, unlike small players who do not have the financial capacity or scale to sign year-long contracts.

This year, Walmart, Target and Home depot (HD) chartered their own ships to bring containers in from abroad and deliver them to ports of their choice – bypassing port bottlenecks that other shippers run into. They also carry more cargo in than in previous years. These options are too expensive and inaccessible to most independent stores and even medium-sized businesses.

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

Collect supplies

Many stores struggle to secure goods due to lack of raw materials, high cost of shipping containers, delays in major ports, shortage of truck drivers and other factors. But inventory levels have risen by more than $ 10 billion combined at Walmart, Target and Home Depot in the run-up to the holidays. These chains say they are in good shape.

Walmart’s inventory levels rose 11.5% over its most recent quarter compared to a year ago, the company said Tuesday. “Three years ago, if we would have said our stock has risen 11%, I would not have been very happy, but now we called it out in a headline because it shows we are ready for the holidays,” said Walmart CFO Brett Biggs in an interview with the Wall Street Journal.

At Home Depot, inventory grew by 27.4% in the last quarter from 2020.

Here's why groceries keep getting more expensive

The Home Depots scale has helped it secure goods relative to competitors, Edward Decker, the company’s chief operating officer, said Tuesday. Some suppliers with limited supplies have even told Home Depot that they give them priority: “‘We can not service the industry, so we would rather focus on the best partner,” Decker said suppliers have told the company.

Target’s inventory levels rose 17.7% last quarter, the company said Wednesday. Target is “well positioned” on key holiday products such as toys and gifts to celebrate the holiday, Target CEO John Mulligan said on Wednesday. This will help Target “continue to gain market share as we go through the holiday season.”

Amazon has also “done a good job of setting up inventory commitments that are larger than normal,” CFO Brian Olsavksy said in a call with analysts last month. Amazon uses multiple containers and brings goods to new U.S. ports to avoid clogged entrances on the west coast.

Go on a recruitment trip

While large chains load on goods, the picture is very different for small stores.

According to a recent survey by the National Federation of Independent Business, a small business lobby group, 39% of small business owners reported in October that supply chain disruptions have had a significant impact on their business. A further 29% reported a 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 stock shortages, which will continue to be a problem during the holiday season,” said NFIB chief economist Bill Dunkelberg.

Meanwhile, companies like Walmart and Target employ hundreds of thousands of workers this holiday stretch, and they say they do not have much trouble filling jobs.

Eat into your profits

In addition, small stores typically have less financial flexibility to absorb higher costs and keep prices low for customers than large competitors.

However, Walmart and Target say they are raising prices at a slower pace than competitors. While it hurts their profit margins, they are betting that the strategy will help them win budget-conscious consumers looking for stores that offer the lowest prices as rising inflation pushes their wallets.

Walmart said, for example, that its price differences relative to competitors are greater than they were before the pandemic because the company absorbs some costs instead of passing them on to customers.

“Our price differences are where we want them,” Walmart CEO Doug McMillon said in an interview with analysts Tuesday.

This could help Walmart gain market share this holiday and into 2022 with a growing number of customers looking to shop down to cheaper stores.

Seventeen percent of shoppers said they planned to shop at various retailers if prices continued to rise, according to a survey of more than 14,000 shoppers conducted online in September by consumer survey firm Numerator.


Leave a Comment