Retailers Well-Stocked for Holidays as Supply Chain Woes Ebb

The supply chain disruptions that plagued retailers during the pandemic—preventing them from keeping their stores stocked—appear to have ebbed just in time for this year’s holiday season.

A combination of retailers revising their logistics strategies—moving shipping schedules up and increasing inventories—ports that have resolved container backlogs and sagging demand from shoppers who are tightening purse strings to cope with inflation will keep stores well-stocked with goods this year.

The Global Supply Chain Pressure Index, compiled by the Federal Reserve Bank of New York, approached its lowest level in two years in October. The Institute for Supply Management’s supplier deliveries index is at its lowest since 2009, with 90% of respondents reporting rapid deliveries, the Wall Street Journal reported this week.

Backlogs of container shipments that clogged the nation’s logistics arteries for the past two years increasingly are being cleared up—including at the ports in Southern California that experienced the worst shipping gridlock.

According to the Marine Exchange of Southern California, which tracks container shipments coming into the ports, there were only six container ships waiting to unload in the waters off Los Angeles earlier this month—down from more than 100 in January.

However, a paradigm shift that is making the East Coast a preferred shipping destination for container cargo—the Port of NY/NJ recently surpassed the ports of Los Angeles as the busiest in the nation, GlobeSt. reported—has ships lining up to enter some East Coast ports, though not anywhere near the crisis levels experienced in LA during the pandemic.

In a KPMG survey in August of 100 retail executives, only 11% said they expected to experience shortages during the holidays in 2022, down from 80% who anticipated supply chain woes a year ago.

Here’s the best news for shoppers (retailers, not so much): the glut of goods in stores is likely to herald an early wave of discounts. Target announced deep holiday discounts this week and said it is shortening lead times for product orders due to shipments that have arrived faster than anticipated.

The easing of the supply chain crunch is beginning to take the steam out of the inflationary spiral. Consumer prices for clothing, appliances, furniture, televisions and toys all fell in October compared to September, WSJ reported.

Producer prices rose 8% in October, but the increase was the lowest in more than a year, the US Labor Department reported.

While some of the largest retailers, including Walmart and Target, now have excess inventory due to ramped up shipments, the overall inventory-to-sales ratio has improved dramatically since the early days of the pandemic.

According to the St. Louis Fed, the inventory-to-sales ratio—which soared to 1.7 in Q1 2020, is now about 1.2.