Discounts will be harder to find this holiday season. Blame the supply chain
By Parija Kavilanz, CNN Business
Every year shoppers expect to find plenty of juicy deals when they start their end-of-year holiday gift buying. This year, those deep discounts could be harder to come by, and a stalled global supply chain is to blame.
Retailers across the board are struggling with their merchandise getting stuck on container ships transporting the goods because of congestion at ports. Adding to the problem is a shortage of workers needed to unload and transport the products from the ships to warehouses and distribution centers.
Many stores won’t be able to get the merchandise that should have already arrived for the start of the holiday shopping spree. And when stores do sell out of items they have, they risk staying out-of-stock on those items for much longer than usual.
The inventory constraints means stores have less incentive to offer deals on the products they have.
Macy’s executives, speaking at a Goldman Sachs conference last month, said the retailer has already been leaner with its discounts this year because of tighter inventory, which has helped boost its profits.
“From a promotional standpoint, this year’s promotional levels have been lower than historical levels, and we’ve been thoughtful about the categories that need promotion and we’ll continue to do so,” Macy’s chief financial officer Adrian Mitchell, said during the conference.
Women’s clothing chain J. Jill also signaled less robust discounting in the coming weeks.
“Supply chain disruption is increasing, resulting in both elevated shipping costs and delays,” J.Jill’s chief financial officer, Mark Webb, said during the retailer’s most recent earnings call with analysts in September.
Although the company is working with its suppliers to expedite shipments, Webb said he expects those disruptions to continue in the next several weeks. He added that the retailer was focused on offsetting higher costs resulting from supply chain pressures by being less promotional and selling products at full price.
Steve Lawrence, chief merchandising officer of sporting goods chain Academy Sports + Outdoors, also told CNN Business that shoppers will see fewer deep discounts during this year’s holiday season.
“There’s been a lot less promotions in the marketplace because there has been a shortage of supply….Last year was not very promotional. We don’t think that this holiday is going to be terribly promotional either,” said Lawrence.
Wells Fargo analyst Ike Boruchow, in a note this month, said retailers in September were offering fewer promotions than they were at the same time last year going into the holiday shopping period.
“Clearance activity once again dipped in September likely driven by supply chain issue,” Boruchow wrote in the note. “Manufacturing shutdowns in Vietnam as well as delays in ports are limiting brands and retailers ability to bring in product.”
–CNNBusiness’ Nathaniel Meyersohn contributed to this story
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