Retailers Hope Close Relationship With Top Vendors Will Pay Off This Holiday Season

Everybody is worried.

Amazon AMZN said that a combination of planes, trucks, ships, vans and well-staffed warehouses, as well as inventory planning and added capacity at ports should prepare the company for the holidays. I hope. There is no doubt that these are great supply chain ideas – and they will pay off – if customers come in droves.

Another retailer just told me that he hopes his excellent relations with vendors will pay off, since he hopes that they will cover any shortages with quick delivery. He told me that he has solid friendship with leading brands. I am sure this relationship is very meaningful – if customers come in droves.

Everybody worries about getting the right merchandise in time for the Christmas selling season.

Los Angeles and Long Beach ports on the West Coast are attempting to reduce the glut of merchandise at these ports by planning to levy heavy fines to ocean carriers if their cargo stays too long at the ports. The Los Angeles and Long Beach harbor commissions will impose $100 fine per container, increasing in $100 increments per container each day until the container leaves the terminal. The program started November 1, with penalties no earlier than November 15.

Approximately 40 percent of the imports at these terminals are idling there for more than nine days. Before the pandemic containers remained at the ports for four days if they were for local deliveries. If the containers were transported by train, they were at the ports for two days.

Pressure to clear the docks comes from highest levels such as John D. Porcari, port envoy to the Biden Harris Supply Chain Disruption Task Forces. He gave his consent to the action to impose fines. His own committee sill seeks answers how to mitigate the global issue. At his request both the port of Los Angeles and Long Beach are now operating on a 24-hour schedule.

President Biden told attendees at the Global Summit on Supply Chain Resilience in Rome that the administration will allocate additional funding to the U.S. and its partners to help reduce port congestion and processing time for entering and exiting the ports.

POST SCRIPT: Forecasters are predicting strong Christmas sales. It depends on when you start counting. Chanukah, the Jewish eight-day celebration at which gifts are given every evening starts very early this year – Sunday, November 28. It will distort some of the results. If we count Christmas sales from November 1 to Christmas Eve, as we did last year during the pandemic, it is more likely to account for most of the holiday gift purchases. Especially since most retailers warn of shortages.  

The National Retail Federation (NRF) on October 27, 2021 predicted retail sales between 8.5% and 10.5% increase. It is a very optimistic forecast and for the sake of the industry and individual shop-owners I hope it comes true. My personal feeling is that sales will be more restrained since I expect a less intense promotional environment. From my vantage point I see retail sales at about half the level of the NRF forecast. Much of the excitement will be on the internet.