Shoppers are facing an all-too-familiar picture in grocery stores recently. From meat to toilet paper, goods are in short supply and there aren’t enough workers to help get them back in stock.
The shortages are just some of the effects of the latest surge in Omicron variant. More workers are calling out sick, and delays due to winter storms are all part of systemic issues and congestion that have been present in the supply chain for years, Jessica Dankert, vice president of supply chain at the Retail Industry Leaders Association, told Barron’s.
“Retailers have done an impressive job of navigating all of the supply chain challenges thrown at them during the pandemic,” she says. “They have the playbook to respond to these pockets of disruption and are working 24/7 to restock shelves.”
Try as they might, the challenge has squeezed an already low-margin business where companies often have less room to increase wages. Shoppers might have also started to see savings deplete from government stimulus, Luq Niazi, IBM global managing director of consumer industries, told Barron’s. The child tax credit, which gave families monthly payments, also ended in December.
The shortages aren’t reflected that much in the stocks. Earlier in the week, shares of
(WMT) fell. Shares of
are up 0.3% on Friday, and have gained 9.5% this year. Shares of
are up 2.1% on Friday, with a 5% year to date increase.
shares are off 0.1% on Friday, and up 0.4% this year.
Additionally, consumers are shopping in a more bifurcated way because they’re not able—or are uncomfortable—spending two hours in a store, Niazi says. They are opting to order online and pick up in-store, or delivery. On top of that, more people are generally eating at home he says.
“What we’re also finding is that certain stores are kind of doubling down on suppliers who can provide them with the inventory that they need,” Niazi says. “And so choice is reducing on the shelves because they might be concentrating on fewer suppliers to kind of cover the categories.”
On Tuesday, Alberstons, which is the second-largest supermarket chain in North America after Krogers, said that costs have risen on ingredients, packaging, transportation and labor. On the company’s third-quarter earnings call with investors, CEO Vivek Sankaran said the latest spike in Covid cases is prolonging some out-of-stock items. Sankaran said on the call that shortages could last four to six weeks.
Credit Suisse analyst Robert Moskow told Barron’s the long-term implications from the pandemic are unclear. “I don’t think anyone really knows for certain what the long term impact of the pandemic is truly going to be,” he says. “Employers have instituted much more flexible work-at-home policies. Those will last.”
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