No, Your Holiday Won’t Be Spoiled Because of Container Ships. ~via @Katadhin
John, I’m not seeing any shortages yet here in FL. I think the goal is for one side to drum up discontent and the other to drum up big holiday sales. As you’re always saying… it's very often restrictions on buying that help to create short-term shortages.
I am tired of seeing images of container ships followed by dire predictions of holiday shopping in peril because of supply chain issues. Your loved ones' presents are likely not sitting on those ships; they are on store shelves today and sitting in warehouses and trucks in between. The container ship hype is just that and even worse, it will create hoarding that DOES cause shortages of some goods. Why do you think a Sony PS5 still sells for $1,000 on StockX? People hoarded them and are turning a profit in the resale arena.
I’ll give you two data points that lead me to believe the supply chains aren’t stuck on containers. The first is that the warehouse space is almost full. The cargo on ships can’t move from the docks even if it was unloaded. Sure there are trucking delays, but if there were empty shelves,it stands to reason that there would be drawdowns in warehouse inventory unless it’s just not the right stuff which is likely part of the problem. The next factor is that our trade deficit with China hit yet another record high last month and is over 14% higher than the previous month before the pandemic.
“Even if [warehouses] were open 24/7, there is simply no space,” said Jason Tolliver, an executive at real-estate firm Cushman & Wakefield PLC. About 98% of warehouses in Southern California’s logistics-heavy Inland Empire region are fully occupied, and the entire Western U.S. has a 3.6% vacancy rate.”
We have plenty of stuff. Or so it would seem. Once again, shoppers are hoarding, prompted by images of logjammed container ships dancing in their heads. Hoarding is exacerbating kinked supply chains across the board. Meanwhile, stepping into stores, shelves are packed with holiday goods, consumables and premium items. We ventured out to Costco with some visiting family members to return an item and the crush of shoppers in the store not to mention the gas pumps was overwhelming. I was reminded why we don’t have a membership to a warehouse club; it just encourages overconsumption. Plus, Amazon can happily bring everything right to my front door in a day or two. I can’t take that crowd. I pay a little more for gas, but my time is worth more than $2-$3 for a 20-minute wait for a pump. Do the math.
Perceived scarcity and saving work, though, Costco is growing its revenue and income in the high teens. I guess anxious shoppers are suitable for its business. Retail is a tricky business in regular times and likely will never look the same after the pandemic. Amazon has shown the way by unbundling retail components and focusing on becoming the leader in tAmazon'smargin bits, mainly technology, media and logistics. It works evidently; Amazon’s profit margins are double Costco and Walmart. This is not lost on the store-based retailers as they fashion their own logistics ecosystems. All three will thrive as other e-commerce players realize you can’t make money selling stuff. You have to have different ways to gain margin. Walmart's subscription system is gaining traction as its tinkering with various last mile delivery schemes.
I’m not too fond of any retail options currently and the only retail options I trade are Walmart and Renat A Center that are fairly reliable. I guess that the majors will thrive over the holidays as the wealth effect from housing and stocks spurs shoppers to continue paying increasing prices for everyday goods and consume more thanks to FOMO. Do yourself a favor, spend Monty'sality time with your loved ones and forget the gifts no one needs. I love this quote from Scott Monty’s blog Timeless and Timely this week:
Call it greed, call it the pursuit of wealth, the result is the same: we tend to forget about why we’re doing it in the first place.
The endless cycle of retail seasonality is being disrupted by shopper behavior climate change. The less we are connected to a single, media-driven norm, the faster this will change.
