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Supply chain woes have retailers bracing for extra inventory in 2022
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Later this morning, we’ll get a read on how well businesses have been able to maintain their inventory levels this holiday season. Given all the supply chain congestion going on, it’s no secret that stocking shelves has been a challenge this year.
Retailers expected that supply chain problems would persist through the holidays, said Brian Yarbrough, consumer research analyst at Edward Jones.
“Some retailers brought plenty of items in early. Some have chartered ships or went to other ports to get items in time,” he said.
Thing is, he said, some of those items might not make it before Christmas. That means many retailers could end up with extra inventory next year.
“If you’re sitting there in February, and you get, you know, a big load of whatever it may be — items that were more Christmas oriented, maybe it’s home decorations, maybe it’s wrapping paper — you’re kind of in a tough spot,” he said.
Yarbrough said some businesses might mark down those products. Others might just store them.
David Marcotte at Kantar said many retailers added more warehousing space earlier this year.
“So putting it away, packing it away if you wish, is something they would never have thought of two years ago, but now they have the ability to do it, so why not?” he said.
To stay ahead of supply chain congestion, Marcotte said many businesses will hold on to any extra inventory, if they can, for at least another year.
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