Dive Brief:
- Lowe's placed larger orders with suppliers earlier than usual ahead of the holidays, as retailers scramble to confront supply chain bottlenecks prior to the busy shopping season.
- Larger orders and increased visibility into the company's need for high-velocity items has allowed suppliers to make "bigger runs in their lines," CFO David Denton said last week.
- Inventory levels are "actually getting better, not worse," according to Denton. Still, "it's a hand-to-hand combat, if you will, to make sure that we get these products."
Dive Insight:
Retailers are working to keep shelves stocked during the holiday season by getting products into warehouses and stores as early as possible.
"We already had Halloween early," said Denton during the retailing conference call. "If we look at the Christmas holiday, that is coming in earlier than we originally planned last year."
The company, which is in the midst of a $1.7 billion supply chain overhaul, has deepend its relationship with suppliers and has largely avoided major shortages by increasing "lead times for the most part," Denton said.
Other companies have also moved to order early in anticipation of a shopping season expected to be busier than usual. Holiday sales are forecasted to increase 7% to 9% this year compared to last, according to a Deloitte survey.
Best Buy CEO Corie Barry said during an August earnings call that the electronics retailer is well positioned for the holiday season after moving "strategically to bring in as much inventory as possible" during the second quarter. Macy's is also "confirming orders with vendors much earlier" than usual, CFO Adrian Mitchell said during the Goldman Sachs retail conference call last week.
But that strategy may not be enough to prevent shortages of certain products, especially as a rise in COVID-19 cases in Southeast Asia has led to factory shutdowns, delaying production of items like electronics and clothing.
Supply chain disruptions in the fashion industry, for example, have prevented Macy's from fully capitalizing on increased demand for dresses, women's suits and other types of apparel.
"We're not as concerned about Beauty, about Soft Home, about Jewelry, which really positions us well for gifting as we get into the fourth quarter," said Mitchell. "We are more cautious about apparel."
via https://www.aiupnow.com
Sarah Zimmerman, Khareem Sudlow
