But there’s good news for shoppers who want to avoid empty shelves and high prices: Products can be found—and cheap. You just need to know where to shop.
America’s most dominant chain stores are expected to be fully stocked – at bargain prices – for most items this season.
This is how they beat the competition.
Michael Baker, a retail analyst at DA Davidson, said in a note to clients this week: “Large retailers will have the ability to navigate supply chain issues and source stock. better than smaller retailers without the opportunity.”
Thomas Goldsby, the Haslam Chair of Logistics at the University of Tennessee-Knoxville, said in an email that leading chains have long-standing relationships with suppliers and purchasing power to convince suppliers of the top priority. for them when there is a shortage of goods. They contracted with suppliers and reached agreements with logistics providers and carriers before the supply chain crisis, unlike small companies that were unable to finance. and the scale to sign multi-year contracts.
“The fact that the big retailers are in a better position is not surprising,” said Goldsby.
Many stores are finding it difficult to secure goods because of a lack of raw materials, rising container shipping costs, delays at key ports, lack of truck drivers and other factors. However, inventory levels rose 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 great shape.
At Home Depot, inventory grew 27.4% last quarter from 2020.
Edward Decker, the company’s chief executive officer, says Home Depot’s size has helped it secure goods ahead of competitors. Some suppliers with limited supplies have even told Home Depot that they are prioritizing them: “‘We can’t serve the industry, so we want to focus on the best partner,'” Decker said the supplier told the company.
The company said Target’s inventory levels rose 17.7% last quarter. Target CEO John Mulligan said Wednesday that Target is “well positioned” for key holiday products like toys and gifts to celebrate the holiday. This will help Target “continue to capture market share as we go through the holiday season.”
Amazon’s chief financial officer Brian Olsavksy said in a call with analysts last month, Amazon has also “done a great job aligning with larger-than-usual inventory commitments.” Amazon is using more containers and bringing goods to new US ports to avoid congested West Coast entrances.
While the big chains are stocking up, the picture for small stores is much different.
“One of the biggest problems for small businesses is the lack of workers for unfilled positions and the scarcity of inventory,” said NFIB chief economist Bill Dunkelberg.
Eat into your profits
In addition, small stores often 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 rate than their competitors. While that’s hurting their margins, they’re betting this strategy will help them attract budget-conscious consumers looking for stores that offer great prices. lowest when rising inflation squeezes their wallets.
For example, Walmart says its price gap with competitors is wider than it was before the pandemic because the company is absorbing some of the costs instead of passing them on to customers.
Walmart CEO Doug McMillon said on a call with analysts Tuesday.
This could help Walmart gain market share this holiday season and in 2022 as a growing number of customers want to switch to cheaper stores.
17% of shoppers said they plan to shop at different retailers if prices continue to rise, according to a survey of more than 14,000 online shoppers conducted in September by the research firm. Numerator consumer.