For retailers, the holidays are a marathon, not a sprint. Preparation starts early, and the miles are long. This past holiday season, the volatile state of the supply chain only complicated the terrain. Retailers had to plan inventory reorders around shipping delays and factory closings. As January comes to an end, retailers may be looking forward to a return to “normal,” but that isn’t quite the case. The new Omicron variant may cause the holiday rush to continue well into the new year.
A New Variant
The Federal Reserve Bank of New York released a new index tracking the pressure on global supply chains. It was predicted that although the strain has peaked, the decrease won’t be substantial. Instead, the pressure is estimated to remain at a moderate to high level. The emerging Omicron variant contributes to this prediction considerably, as we’ve already seen the Delta variant’s large impact on the supply chain. Variants cause factories to close due to outbreaks while also pushing consumers to online orders. We can expect the Omicron variant to have a similar impact on supply chains as the Delta variant.
The Lunar New Year
Countries relying on Chinese factories also have another event on the horizon to plan for: the Lunar New Year. The Chinese holiday historically slows down the supply chain as factories close for festivities. Typical practice for American companies is to order supply in advance, but possible factory closings due to the Omicron variant will complicate this situation.
Prices Remain High
Drewry’s composite World Container Index, which tracks container freight rates weekly, rose by 1.4% to $9,544.66 per 40ft container in the week of January 13th. This steady rise in shipping costs on prices that were already historical highs causes prices to continue to climb for consumers. As a result, both retailers and customers should expect current holiday premiums to persist.
The Key of Adapting
As the holiday rush continues to be felt, retailers should learn how to adapt to the heightened tension instead of holding out for change. Businesses that will thrive over the coming months are the ones that will adjust to this new normal quickly. Investing in Demand Forecasting and innovative software are steps retailers can take to meet the supply chain crisis head-on. The unpredictable supply chain can still be understood with the right data analytics. Retailers that can avoid stockouts amidst global shipping delays will drastically set themselves apart from competitors.
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