Americans will have trouble finding what they need this year when they shop for back-to-school supplies. Persistent supply concerns and difficulty in forecasting have hampered back-to-school inventories. These concerns pop up from Asia, US West Coast ports, or domestic transportation congestions. This year’s back-to-school season will see record spending, but shoppers will face shortages because of intense demand, low stocks, continued pandemic-related supply chain, and distribution challenges. For these reasons, many customers are already looking for alternatives such as refurbished and used products.
Stretched Supply Chain Ecosystem
Retail sales in May 2022 increased 8.1% year-over-year and 6% from May 2019 before COVID, excluding car purchases, petrol, and restaurant spending. National Retail Federation (NRF) predicts sales growth for 2022 to be between 6 and 8%. This growth rate will be lower than last year’s 14% increase, which was the greatest in more than 20 years.
US retailers anticipate import volumes to be nearly record-high this summer and into the fall, with June volumes expected to be 7.5% higher than June 2021 — the third-highest month on record for imports.
Jonathan Gold, VP of supply chain and customs policy at the NRF, stated in the organization’s most recent Global Port Tracker that already-stressed ports and inland supply chains should be ready for ongoing difficulties during the peak shipping season (GPT).
Cost-conscious Customers
As peak season approaches, retailers are lowering prices to clear out shelves and make place for new inventory.
Customers are looking for those bargains as well. In its BOXpoll consumer survey, released earlier this month, Pitney Bowes found that 60% of respondents were keen to take advantage of markdowns due to surplus inventories, rising interest rates, and inflation. As many customers look for discounts, overstocks and markdowns will affect the store’s profitability and open up new opportunities to sell.
Big box retailers’ front-loading
Big-box retailers like Walmart and Target have started front-loading inventory. Last year’s Halloween products arrived for some retailers as late as December. Front-loading is happening to prevent any delay to this year’s holiday readiness. But this paranoia is now contributing to the overstock. Retailers already have Christmas-themed products on the ocean or waiting on land.
For example, to ensure the business is fulfilling consumer demand, Kohl’s revealed that first-quarter inventory was up 40% above Q1 2021 and has added additional in-transit lead time.
How retailers are shipping school supplies on time
Back-to-school shopping is a ritual for families as well as a significant one for businesses. It generated about $110 billion in sales last year, considering college spending as well. Back-to-school shopping also heralds the start of the peak shipping season, a crucial period in freight and logistics that typically lasts for approximately half of the year.
Regarding retail supply chain mechanics, back-to-school supply chain planning is a bit different from the rest of the year. A few back-to-school supply chains point out that shippers are currently prioritizing and ensuring that the top running products are available on store shelves in time. Maintaining them there throughout the busy holiday shopping season can be challenging without taking special actions, such as:
- Prioritize the items that will be required most throughout the back-to-school season.
- Look at a variety of capacity alternatives, such as new carriers and modes (like intermodal, for instance).
- Ensure the storage has temperature control, as it can be required for electronics, batteries, and other temperature-sensitive items.
- Negotiate reasonable freight costs; ideally, contract rates are in place for the season, but spot rates should be explored to add more capacity.
- Create long-term carrier partnerships which work to your advantage when considering capacity and price.
- Ensure that the front-load shipments of the essential goods are either in shops (or shippable for e-commerce sites) or staged at distribution centers and ready to go.
- Maintain close inventory control to guarantee product availability, quality, and controlled obsolescence or pilferage.
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