shipping containers

Supply Chain Delays and Labor Shortages: How to Prepare for Holiday 2021

Few of us will forget the Great Toilet Paper Shortage that occurred early in the pandemic but how many of us would have projected the long-term impact on retail supply chains? Supply chain experts, for one.

The ongoing complications with supply chains are causing headaches for retailers and suppliers. Let’s take a look at what’s going on and how suppliers can prepare for the upcoming holiday season.

What’s Going on With Retail Supply Chains?

One year after “Shippageddon,” global supply chains are still tangled worse than an old fishing line. Shipping prices are skyrocketing, delays are worsening, and retailers, suppliers, and consumers are wondering if they’ve already fallen behind on their holiday wish lists.

But what’s driving these challenges? Bottlenecks up and down the global supply chain. Three driving forces are:

  1. Increased consumer demand: after the initial spending freeze when COVID-19 first hit, consumers started to open their wallets back up, especially after the stimulus checks in 2020 were mailed out. And where did much of those dollars go? Online ordering. Those e-commerce orders added up to a 44% increase, further straining supply chains and delivery services.

  2. Shipping container capacities are maximized, especially as ports in China have been grappling with COVID-19 outbreaks. Less space means backlogs for months and uncertain timing as new outbreaks crop up.

  3. And due to the decreased shipping space, shipping prices have skyrocketed, further complicating matters for retailers and suppliers who carefully project their needed margins months and months ahead of time. Rob Garf, Vice President and General Manager of Retail at Salesforce predicts that “U.S. companies will spend $163B more on ocean freight in the second half of 2021 than they did in the second half of 2020.”

Later in the supply chain, package delivery is also running behind as evidenced by UPS CEO Carol Tomé saying, “Package delivery demand during the 2021 peak season is projected to exceed capacity by about 5 million pieces per day.”

All of these forces combine to create the perfect storm, one that’s not going away any time soon. With the holiday season already on our doorsteps, this is especially crucial for retailers and suppliers to pay attention to.

What’s Happening with Retail Labor Shortages?

To complicate matters even more, we’re in the midst of a retail labor shortage. The Department of Labor estimated there are about 965,000 job openings in retail.

Retailers are responding by upping their offer. For example, Walmart announced they will hire 20,000 workers and will be paying supply chain associates $20.37 per hour and had raised their hourly rate to $15.25.

But will incentives like this be enough? Only time will tell. But in the meantime, suppliers should be aware that labor shortages are a reality and can impact in-store retail execution, particularly in advance of the busiest shopping season of the year.

How to Prepare for Holiday Retail Execution

How can suppliers prepare to make sure their sales don’t suffer this year? It’s not enough to hope and brace for impact. Rather, get ahead of the game by padding your in-store merchandising team to maximize sales opportunities.

Here are three things to keep an eye on this season that a retail merchandiser can help out with:

1. Displays

Pay attention to sidecap and endcap displays. These prime real estate locations are not to be wasted. Make sure you have consistent eyes on them and someone making sure they are set, frequently stocked, and priced correctly, even if your product is late arriving. Services like RMS’ Display Services can fill this need for suppliers.

2. Planogram Maintenance

With 70% of purchase decisions made at point of sale, you can’t afford not to have your products in stock and engaging to the customer.  Don’t let late arriving products and strained labor affect your product placement.  Partner with a retail merchandiser who can maintain your planograms as if they were their own.

3. Holiday Set Audits

Speaking of planograms, did you know that only 50% of them are set on time and correctly? That number is bound to get worse this year. Prioritize an audit service to make sure your precious inventory isn’t left behind.

RMS is here to help with all of these services and more.

BONUS: if you are a Target supplier, check out our Target exclusive services.

This year is shaping up to be a retail holiday season like only one other: 2020. Taking the collective lessons learned last year and applying them to now will help suppliers navigate the complex sales season and mitigate retail supply chain and labor shortage challenges.

Make sure your products shine this holiday season. Contact RMS for a free consult today.