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.
“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.
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.
“The fact that large retailers are in a better position is no surprise,” Goldsby said.
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.
At Home Depot, inventory grew by 27.4% in the last quarter from 2020.
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.
“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.
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.