Navigating Retail’s New Normal: Sales Surge Amid Supply Chain Struggles and Workforce Woes

4 TODAY NOV-DEC 21

First the Good News…

At least as I write this business is bouncing back nicely for most especially in categories where sufficient product is available. We saw many cases where July sales (latest month available) actually exceeded 2019 levels. Couple the sales increases with lower inventory levels and the result is faster turn and better cash flow.

Now for the Bad News…

The aftermath of COVID-19 has created many challenges for the footwear industry and retail in general to deal with in the coming months. In no particular order trouble spots include:

• Finding good help (or in some cases finding ANY help)
• Rising prices due to inflation
• Stock shortages
• Supply chain interruptions
• Rises in COVID cases in some areas of the country

Finding Good People

Much has been extensively covered on this topic by Management One the merchandise planning company that I am affiliated with. In the interest of brevity and avoiding duplication here is a link to an interview that Management One CEO Marc Weiss had with Kim Pagano of Publik …: Interview Link. Not only will you find worthwhile ideas from this interview but you will be able to gain access to the webinar entitled “Talent Acquisition: Finding and Attracting the Right Talent for your Retail Business.”

Supply Chain Challenges

Certainly this fall and perhaps well into 2022 and beyond the retail landscape will endure its share of stock outs and supply chain interruptions. Whether caused by lower productivity at U.S. ports back-ups at ports in China driver shortages here in the U.S. factory shutdowns union issues or lack of anticipation of retail demand at the wholesale level the result is the same – anemic assortments and lack of availability for shoes your customers want to buy.

According to a well-respected equipment leasing consultant that I…

Supply Dilemma

The entire supply dilemma is analogous to a wave starting small at the beginning and getting bigger and bigger until it finally crashes into shore. According to this source these supply chain disruptions will most likely not smooth out until Q1 or Q2 of 2022 at the earliest.

Product Distribution

Product distribution as it pertains to future availability in the footwear industry is a moving target to be sure with uncertainty being the one thing that can be counted on at this point. I spoke with a buyer from a multi-store operation that offered the following advice:

– Write future orders for up to one month of earlier delivery to help offset late deliveries.
– Anticipate future needs by placing aggressive backups that can be modified prior to ship date if needed.
– Stay in touch with your key vendors and review the open-order position every week for updates. Don’t wait for them to contact you. In most cases it won’t happen! Be proactive!
– Overbuy your merchandise plan by whatever percentage you are comfortable with IF you are concerned about cancellations. Word of caution be careful if you employ this strategy for obvious reasons.

By the time you read this futures for athletic shoes most certainly will be pushed out to the end of 2022. Other categories in the shoe industry will most likely be impacted as well.

Positives Amidst Challenges

There are some positives that have and will continue to surface as a result of this dilemma. Supply chain interruptions have forced many retailers including the one mentioned above to develop relationships with alternative vendors. This has proven to be win-win-win for vendor retailer and consumer. The vendor gets a chance to perform at a store that has never carried their products before. The retailer gets to keep his inventory plan intact albeit with an alternate assortment plan and the consumer gets the products they want.

Vendors Becoming Valued Business Partners

This is vendors that in the past may not have been the first choice are becoming valued business partners. All of these issues make merchandise planning at the retail level much more challenging to say the least.

Economic Rebound and Business Challenges

Business is good to very good in many cases due to the economic rebound. An even better scenario would be if stores could schedule needed deliveries without having to book futures out a year in advance or overbuy in hopes of getting half of what they originally ordered.

Many retailers are rolling the dice by deciding what categories to gamble on (athletic shoes) by committing to future buys that are in excess of what they would normally place as the concern is that reorders and fill-in orders might well be non-existent.

Projecting Inventory Needs

With business rebounding to 2019 levels and above and supply issues impacting many products and entire categories the question becomes how best to project inventory needs during this period of uncertainty? Hopefully you have a merchandise plan in place that incorporates sales trending to some degree. That will help you project short term (Q4 of 2021 through Q2 of 2022) inventory requirements.

One client I spoke with recently had just returned from market where she was counseled that if cash and space were available (both are) she would be well served to land ALL of her holiday goods now to make sure that she would get everything needed. Given the uncertainty of availability closer to need I think that was good advice this year.

Current Business Trends

I am seeing many cases where business is currently up fifty-plus percent over 2019 levels. Stores are selling everything they can get their hands on in many cases creating faster inventory turnover and solid cash flow.

CERN Moving Forward

When supply chain issues level out – which they will and sales levels normalize – which they will it is crucial that stock-to-sales ratios are closely monitored by store and classification. Otherwise the pendulum is likely to swing too far in the opposite direction causing the undisciplined retailer to end up in an overstocked situation. That would be unfortunate but it is also easily preventable with accurate merchandise planning in place.

The Best of the Season to all! ■

Ritchie Sayner

Ritchie Sayner is with Advanced Retail Strategies LLC an affiliate of Management One. Sayner’s book Retail Revelations: Strategies for Improving Sales Margins and Turnover (2nd Ed.) is available on Amazon. He can be reached at advancedretailstrategies.com.

Debbie Fitzpatrick

Member Services Coordinator

Debbie Fitzpatrick is in her 11th year with NSRA. Originally she was hired as an Administrative Assistant but as with all staff she has taken on more responsibilities. She now works as the Member Services Coordinator. When people call the office hers is the sunny voice they hear first. She assists independent retailers in joining the Association is the liaison for our benefit programs and is the one who keeps the NSRA office running smoothly.

Prior to her career at NSRA Debbie had a variety of jobs. Among them she owned her own frozen yogurt shop worked in retail and was active in escrow for many years.

Her favorite part of her position at NSRA is “working with some great people who make coming to work enjoyable.” She loves the annual conferences and getting to see our retailers face to face. “As I work with members I always enjoy getting to know them. I even feel like friends after we’ve spoken on the phone. Our members are hardworking and very kind.”

Debbie is very close with her family and enjoys spending time at home with them. Three years ago she moved in with her parents to help her mom take care of them.

Care of Her Dad

Debbie takes care of her dad who has Alzheimer’s. There is never a dull moment with her dad and she likes sharing his stories.

Passions and Interests

Debbie is an avid foodie who will try most anything once. She also enjoys theater hanging out with friends and traveling when she can.

Favorite Travel Destinations

When asked about her travels Debbie says Europe which she has traveled in extensively and Israel top her list for favorite places. There are so many places she would like to visit in the future including Canada Ireland and Australia. “But there is a whole world out there and I would love to do as much as I can while I am able.”

Traveling in the States

She has also been able to see many places in the states due to traveling for NSRA conferences and seminars. “I usually try to go in early or stay after our events with co-workers to see some of the sites the cities have to offer.” She would love to go on a road trip and see as many states as possible.

Meet Debbie

Next time you see Debbie please stop and say hello. Don’t be shy she loves talking to members.

■ Debbie Fitzpatrick
NSRA STAFF PROFILE
Sayner
continued from page 4

Summary

The footwear and retail industries are experiencing a rebound in sales often surpassing 2019 levels yet face significant challenges due to COVID-19’s impact on supply chains labor shortages and rising costs. Retailers are adapting by developing relationships with alternative vendors proactively managing inventory and planning for potential disruptions well into 2022. Despite these obstacles the situation has fostered new business partnerships and opportunities for growth.

“The entire supply dilemma is analogous to a wave starting small at the beginning and getting bigger and bigger until it finally crashes into shore.”

Real-World Examples of Supply Chain and Retail Challenges

The challenges and strategies discussed in the article are reflected in various real-world scenarios across different industries. Here are some examples:

• In the automotive industry companies like Ford and General Motors have faced significant supply chain disruptions due to semiconductor shortages. This has led to production delays and reduced inventory levels forcing these companies to prioritize the manufacturing of their most profitable vehicle models.
• Retail giants such as Walmart and Target have been proactive in dealing with supply chain issues by chartering their own cargo ships to ensure timely delivery of products. This strategy aims to mitigate port congestion and ensure shelves remain stocked during peak shopping seasons.
• The tech industry particularly companies like Apple have had to adjust their product launch timelines and inventory strategies due to global chip shortages. As a result consumers have experienced longer wait times for new devices and companies have had to communicate these delays transparently to maintain customer satisfaction.

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