Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio.
Today I would like to talk about the article from Wall Street Journal, “Discount Stores Booming as Supply Chain Disruptions Delay Shipments.”
Daily Logistics Radio by IINO san in 23rd Mar. 2022
Discount Stores Booming
The supply chain disruptions plaguing general retailers are benefiting apparel discounters, the article reports.
Port congestion has caused buyers at discount stores to buy up clothing and other items that have been delayed in coming in.
Take advantage of Supply Chain Issues
Since apparel is a seasonal product, the retail pattern is for large brand-name stores to sell excess inventory of clothing past the season to discount stores or transfer it to outlet stores at heavily reduced prices.
Corona pandemic was marked by a rush by retailers to replenish their inventory.
This led to heavy congestion at major ports such as Los Angeles and Long Beach, and triggered major delays in deliveries.
Unique Buying Opportunities
Analysts in the U.S. have stated that, “supply chain disruptions create unique opportunities for off-price retailers, primarily for inventory clearance.”
And, “full-price retailers must decide whether to accept or reject delayed orders.”
It is an opportunity for discount retailers and a crossroads for retailers that sell regularly.
A representative of one discount store chain said that supply chain issues “have brought our own product availability.” Also, he said, “We have an important ability to target opportunities and access brands in today’s marketplace.”
Although many retailers are ordering ahead of schedule and major trading companies are chartering ships to avoid bottlenecks, the current delays are jeopardizing the launch of spring merchandise.
GAP’s CEO said that seasonal merchandise has been delayed by eight to 10 weeks due to congestion at West Coast ports and the shutdown of its Vietnam factory last year.
And an apparel retailer is holding $12 million worth of merchandise for sale in its outlet stores in the fall because of shipping delays.
Purchasing Environment of Discount Stores
The bottleneck of supply chain is also affecting the purchasing activities of the discounters themselves.
Discount store Burlington reported that its inventory reached $1.02 billion in the most recent year due to longer lead times and an increase in goods in transit.
This is an increase of about 30% from $777 million two years ago.
The company’s CEO noted that while shipping issues have occurred across the retail sector, but these issues have resulted in a really strong off-price buying environment.
Although inventories are increasing, the ratio of inventory to sales for retailers has been gradually increasing recently, but still remains at historically low levels.
The outlook is for more goods to flow into the discount retailer supply chain.
For some industries, this could be a good direction and a business opportunity due to Corona.
I think the best way to read these economic trends is to get lots of current world and information on a regular basis.
I would like to update this kind of information.
That’s all for today. Thank you.