Berliner Boersenzeitung - Managing inventories a pandemic headache for US businesses

EUR -
AED 4.015568
AFN 77.462602
ALL 100.23676
AMD 424.436429
ANG 1.969812
AOA 954.017417
ARS 1008.815402
AUD 1.621988
AWG 1.968416
AZN 1.86165
BAM 1.955282
BBD 2.206789
BDT 128.406009
BGN 1.954876
BHD 0.41207
BIF 3147.099456
BMD 1.093261
BND 1.46516
BOB 7.552279
BRL 5.947639
BSD 1.092996
BTN 91.316938
BWP 14.769049
BYN 3.576858
BYR 21427.907663
BZD 2.20309
CAD 1.494799
CDF 3104.860599
CHF 0.969329
CLF 0.036075
CLP 995.410813
CNY 7.936198
CNH 7.94833
COP 4350.00738
CRC 571.345437
CUC 1.093261
CUP 28.971406
CVE 110.254471
CZK 25.292581
DJF 194.594297
DKK 7.459563
DOP 64.493841
DZD 146.677282
EGP 52.705875
ERN 16.398909
ETB 62.771205
FJD 2.433871
FKP 0.842423
GBP 0.839028
GEL 2.968217
GGP 0.842423
GHS 16.853082
GIP 0.842423
GMD 74.095741
GNF 9413.508082
GTQ 8.474191
GYD 228.659797
HKD 8.535731
HNL 27.066835
HRK 7.55219
HTG 144.276222
HUF 391.338091
IDR 17631.06828
ILS 3.968727
IMP 0.842423
INR 91.355971
IQD 1431.763269
IRR 46026.271127
ISK 149.30625
JEP 0.842423
JMD 170.973672
JOD 0.774795
JPY 171.200279
KES 142.124422
KGS 92.881012
KHR 4488.571347
KMF 494.20844
KPW 983.934918
KRW 1507.890108
KWD 0.334035
KYD 0.91078
KZT 519.670372
LAK 24209.688007
LBP 97875.553014
LKR 332.002113
LRD 213.125748
LSL 19.882001
LTL 3.228114
LVL 0.661302
LYD 5.284495
MAD 10.743274
MDL 19.355443
MGA 4917.530382
MKD 61.61757
MMK 3550.867767
MNT 3771.749431
MOP 8.788639
MRU 43.262548
MUR 50.913229
MVR 16.832832
MWK 1895.149676
MXN 19.437405
MYR 5.09842
MZN 69.859342
NAD 19.882001
NGN 1765.441372
NIO 40.236158
NOK 11.760511
NPR 146.112046
NZD 1.79696
OMR 0.420867
PAB 1.092996
PEN 4.060512
PGK 4.279591
PHP 63.695524
PKR 304.422814
PLN 4.295164
PYG 8253.815073
QAR 3.987045
RON 4.968103
RSD 117.037884
RUB 96.371801
RWF 1431.210956
SAR 4.100477
SBD 9.246366
SCR 14.832327
SDG 657.049748
SEK 11.511668
SGD 1.465762
SHP 0.842423
SLE 24.978056
SLL 22925.132054
SOS 624.640348
SRD 32.463288
STD 22628.287033
SVC 9.561469
SYP 2746.850447
SZL 19.877102
THB 39.283591
TJS 11.639763
TMT 3.837345
TND 3.391702
TOP 2.58168
TRY 36.182875
TTD 7.419291
TWD 35.551191
TZS 2901.823052
UAH 45.33757
UGX 4043.61384
USD 1.093261
UYU 43.888382
UZS 13753.359249
VEF 3960393.939438
VES 39.875717
VND 27686.82457
VUV 129.794125
WST 3.065075
XAF 655.894363
XAG 0.035359
XAU 0.000443
XCD 2.954591
XDR 0.824421
XOF 655.894363
XPF 119.331742
YER 273.670464
ZAR 19.87209
ZMK 9840.662648
ZMW 28.499278
ZWL 352.029466
  • RBGPF

    0.0000

    56.9

    0%

  • CMSC

    0.0100

    24.42

    +0.04%

  • CMSD

    -0.0150

    24.555

    -0.06%

  • AZN

    0.4700

    78.59

    +0.6%

  • GSK

    0.2300

    38.9

    +0.59%

  • BCC

    10.5800

    136.8

    +7.73%

  • NGG

    0.1800

    60.99

    +0.3%

  • SCS

    0.2200

    13.75

    +1.6%

  • RIO

    -1.2300

    66.32

    -1.85%

  • BCE

    0.2500

    32.95

    +0.76%

  • RELX

    0.3200

    46.31

    +0.69%

  • RYCEF

    0.1100

    5.92

    +1.86%

  • BTI

    -0.0600

    32.14

    -0.19%

  • JRI

    0.0300

    12.6

    +0.24%

  • VOD

    0.0000

    9.03

    0%

  • BP

    -0.1400

    34.89

    -0.4%

Managing inventories a pandemic headache for US businesses
Managing inventories a pandemic headache for US businesses / Photo: Patrick T. FALLON - AFP/File

Managing inventories a pandemic headache for US businesses

More than two years into the Covid-19 pandemic, American businesses are still struggling to manage their inventories in a feast-or-famine cycle caused by fickle consumer demand.

Text size:

"We have way too much inventory right now," said Ginny Pasqualone, chief executive of Sparkledots, a children's clothing manufacturer.

"It's important that we have a large selection of merchandise that our clients can choose from," she said, but store traffic has been hit by inflation concerns, with some customers "very scared that they're not going to survive another recession."

For now, Sparkledots is holding more goods in inventory, but that ties up company capital and limits its ability to add to its 18-worker staff.

"It sucks our growth for the future," Pasqualone said.

Such is the dilemma affecting businesses of all sizes.

Large store chains like Walmart, Target and Macy's have acknowledged in recent weeks that they misread consumer patterns, leaving them with excess supplies of appliances, casual clothing and bicycles.

Bicycles were a hot commodity early in the pandemic, prompting surprisingly large orders, said Wayne Sosin, owner of Worksman Cycles, a New York manufacturer best known for its tricycles.

"Retailers bought whatever they could as if bike sales would continue to have unprecedented demand," Sosin said. "It was so obvious to me that (this) would not last."

Still, Sosin said demand remains strong in some parts of the business, placing stress on supplies of some key bicycle parts.

- Unexpected shift -

Torrid consumer demand since 2020 fueled by government pandemic relief programs has led to product shortages and backlogs in seaports.

"The business can no longer count on the idea that you're going to have this easy, just-in-time inventory and that you can only keep stock on hand that you need," said Phil Levy, an economist for logistics company Flexport.

Companies are unsure how much the outsized buying during the pandemic will persist and for which goods.

"The way we tend to predict things is by looking at past patterns," Levy said. "But we don't have data on how the consumers behaved during the five recent major modern pandemics."

In the most recent quarter, the big-box chain Target saw sales of appliances, clothing and other goods slow as consumers shifted spending to travel and other service-oriented consumption.

"We didn't anticipate the magnitude of that shift," Target Chief Executive Brian Cornell said on an analyst conference call.

As a result, Target had bought too many televisions and too much outdoor furniture.

Similarly, department-store chain Macy's was caught off guard by a 20 percent drop in sales of casual clothing and housewares in the most recent period, compared with the prior quarter.

At the same time, "supply chain constraints relaxed," unexpectedly boosting deliveries of merchandise, said Macy's Chief Executive Jeffrey Gennette.

- 'Wildcards' -

Retailers have adopted different strategies for dealing with a glut of goods.

Target has moved some of its goods outside of stores into temporary storage facilities, while liquidating seasonal merchandise no longer in demand.

Others plan to offer more discounted items. Apparel chain Urban Outfitters expects promotions to increase "not just in the second quarter, but throughout the year and into the holiday season," said Chief Executive Richard Hayne.

The consumer remains the "wildcard," said Brian Yarbrough, an analyst who follows consumer companies at Edward Jones.

Demand for goods has remained fairly robust even as consumers spend more on services and contend with inflation, Yarbrough said.

Among other unknowns is the state of ocean shipping between Asia and the United States. Will ports on the US West Coast again struggle with delays, or even a possible strike due to high-stakes labor negotiations this summer?

"How long will it take to ship freight from Asia to the US to have stuff on the shelves this fall?" wonders Levy. "You just don't know."

(U.Gruber--BBZ)