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10/28/2021

Navigating this highly complex holiday season

This month, David Orgel discusses how retailers need to pull out all the stops to reduce supply chain hurdles and reassure consumers.
David Orgel
Principal, David Orgel Consulting
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Shortages of nationwide truck drivers. Bottlenecks in ports. Product unavailability. Price increases. 

This year’s severe supply chain challenges have been highly disruptive. Now combine this with the approaching holiday season, and we have a perfect storm for food and drug retailers without a proven road map. 

This phenomenon was described as the “Everything Shortage” in an Oct. 7, 2021 piece in The Atlantic by author Derek Thompson:

“I visited CVS last week to pick up some at-home COVID-19 tests. They’d been sold out for a week, an employee told me. So I asked about paper towels. ‘We’re out of those too,’ he said. ‘Try Walgreens.’ I drove to a Walgreens that had paper towels. But when I asked a pharmacist to fill some very common prescriptions, he told me the store had run out. ‘Try the Target up the road,’ he suggested.”

Retailers need to pull out all the stops to reduce supply chain hurdles and reassure consumers.

[Read more: NRF reporting holiday sales increase]

Product shortages of all kinds have led leaders in the U.S. government and business sectors to address national supply chain issues. However, we should not expect any quick fixes. Individual retailers will have to do the heavy lifting on their own for now. They need to react by pulling out all the stops to reduce hurdles. Here are some smart strategies you can use:

Limiting items: In a move reminiscent of retailer strategies last year, Costco has reinstated purchase limits on items like toilet paper, cleaning products and bottled water. 

Buying early: Some retailers that have long relied on just-in-time supply chains have been ordering and bringing in inventory much earlier for the holidays to avoid falling short. 

Hiring supply chain expertise: Target recently announced that it would add some 30,000 new supply chain jobs in the face of supply chain challenges. Meanwhile, Walmart was planning to add about 20,000 employees in distribution centers, fulfillment centers and
transportation offices. 

Taking control of transportation: Walmart made a move to charter its own vessels to prepare for the complexities of shipping during the holidays. Costco has rented container ships and thousands of containers for similar purposes.

[Read more: Target outlines its supply chain strategy]

These are all smart strategies to navigate supply chain complexities. Yet, more is required as well. Retailers will need to manage consumer expectations and experiences on everything from product availability to price increases.

A new Oracle consumer study cited in Chain Store Age on Oct. 4, 2021 found that 63% of respondents want brands to provide more regular updates about shipping status, 59% want them to be more transparent about inventory and 54% want more transparency on potential supply chain issues. Eighty-four percent of respondents said delays would lead them to cancel an order, and 80% said delays or shortages would even prompt them to stop buying from a brand entirely.

Retailers need to be transparent with consumers and other stakeholders about their strategies, and empathetic about the inconveniences. Walmart did a nice job in this regard, with a recent communications piece that struck a reassuring tone in outlining all the steps it’s taking to mitigate supply chain hurdles.

[Read more: Walmart to go on holiday hiring spree]

There’s a decent chance this holiday season will be a good one for retailers, despite all the supply chain complexities and lingering consumer concerns about COVID. But that will only happen if retailers take proactive strategies. Moreover, supply chain disruptions are likely to remain until at least the spring, if not longer. So even as retailers come up with fixes for the fourth quarter, they should consider how to keep addressing supply chain hurdles past the holidays with creative longer-term solutions.

More Blog Posts In This Series

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