Tangled supply chains and scarce workforce threaten retail sales

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With a record 100 ships waiting to dock and unload outside the Port of Los Angeles, President Biden’s recent announcement that the port will operate 24/7 has been good news for those who looking forward to a busy holiday season.

It is the latest in an ongoing saga of disruption in the global supply chain that began during the pandemic. This includes a record demand for industrial warehouse space, which is becoming more and more intense day by day.

And then there is the question of work. Dockworkers, truck drivers and even retail salespeople are all in short supply. With what is expected to be the busiest quarter since the start of the pandemic, the disruptions could push up industrial rents even more and leave retailers scrambling.

Unaware of these forces, consumers are ready to take advantage of the coming holiday season.

“We anticipate a huge increase in buyer demand this holiday season,” says James Cook, research director for JLL’s Americas in retail in a new Publish. “There are now fears that supply issues will result in bare shelves.”

There is not enough space

Industrial real estate developers are trying to keep pace with the explosion in online shopping. But while inventories have risen dramatically in the United States, in many markets there isn’t much land to build on. The vacancy rate in the United States has hit an all-time low of 4.3%, according to Mehtab Randhawa, senior director of industrial research, JLL.

This has caused industrial rents to skyrocket.

Large big box retailers are in a better position to absorb the shock of the supply chain issues that lead to these product shortages at the worst possible time. Some of them, including Target, charter their own freighters and store goods before the holidays, creating additional storage demand.

“Big box retailers will come out with more market share,” Cook said.

Sandy Sigal, President and CEO, NewMark Merrill Companies, told GlobeSt: “Although it has been great to see the strong desire of customers to come back to the storesand our traffic is not only showing increases over 2019, but historically strong traffic and salesour fear is and always has been that the customer will not get the experience that should lock them in for the long haul once their savings and “cabin fever” wears off.

“Not enough waiters, chefs, salespeople, etc.

“Although this is the first ‘normal’ holiday shopping season in two years and we believe there will be traffic, what concerns us is customer sentiment and satisfaction and if it impacts their future outlook on in-person shopping. “

Warehouse workers in desperate need

The supply shortage is the result of cascading factors driven by the pandemic. Factories have been plagued by repeated shutdowns due to the Covid-19 outbreaks. Freighters and containers are not where they should be. Goods have piled up in the ports.

In larger ports, such as the Port of Los Angeles in Long Beach, ships wait up to three weeks to unload cargo. Once they arrive and unload, there is always the problem of the labor shortage: not enough truckers or train operators.

And the labor shortage does not end there. A shortage of workers in the retail industry has put a strain on businesses hoping to keep up with increased traffic during the holidays. Warehouses also face a shortage of workers, but less as some retail workers change jobs due to higher wages and incentives.

“This has been an in-store issue getting store associates due to competition from big box warehouses,” Cook said. “Warehouses generally pay higher wages than store associate jobs.”

Disappointing consumers in the grocery store aisles

Doug Munson is a director at MTN Retail Advisors, a national Salt Lake City-based major grocery research and data collection company that works with nearly all of the major grocery companies to help real estate investors determine the best locations. for grocery stores.

“The pandemic has reinforced a belief that investors have always held, grocery shopping is essential and virtually recession-proof,” Munson told GlobeSt. “This fact was reflected in the better performance recorded by just about every grocery retailer and retail outlet anchored in the grocery store during the pandemic.

“Against this backdrop, what we’re seeing today is that staffing is a huge issue facing grocery retailers, and the supply chain disruption may have even more of an impact. impact on the sector. We see significant product gaps in almost every aisle of a grocery store, not just the toilet paper aisle. These are wholesale loopholes that retailers have never seen before.

“Consumers are used to seeing full shelves, so this condition should have a huge psychological impact on them. Even though demand is high, the impact of a reduced labor pool and supply chain issues add to the inflated costs to build and stock a store. The result is that food retailers are holding back expansion or investment plans a bit. “

Avoid “over-promises”

Supply shortages are hurting industrial space and development in other ways.

Jessica Mann-Amato, design director and co-owner of Mancini, a 105-year-old technology-driven design company in New York City with regional offices in Red Bank and Millburn, NJ., Told GlobeSt that her company is constantly reassessing supply chain for materials and components to find shorter delivery times for our projects.

“Suppliers are doing all they can; However, the whole world faces these challenges, so the solutions are limited.

“When we start a new project, we are very open and honest with our customers about delivery times. We also avoid promising too much. As an architecture and design firm, we proactively track and control every element so that we, in turn, can manage our clients’ expectations.


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