Investor Alert

June 15, 2021, 7:49 a.m. EDT

Consumers find shortages and higher prices as COVID-impacted supply chains shift for recovery

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Tonya Garcia

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“The biggest way we’ve handled supply chain delays is adjusted ordering and front-loading, if you will, of orders of many items,” he said. “And we think we’ve got that pretty well under control. The feeling is that this will continue for the most part of this calendar year.”

Clorox Co. /zigman2/quotes/206443229/composite CLX -0.61% discussed the higher price of raw materials, particularly the resin that’s used in its trash bags, during its last earnings call. The company has announced price increases to cover the cost.

Clorox is one of a few companies, including Kimberly-Clark Corp. /zigman2/quotes/201766540/composite KMB -0.0074% , Hormel Foods Corp. /zigman2/quotes/209170265/composite HRL -0.91% and Procter & Gamble Co. /zigman2/quotes/202894679/composite PG +0.15% that have announced price hikes.

Moody’s Louis also notes that the supply chain has been affected by weather and other factors over the past couple of months.

Also: Why supply-chain bottlenecks, price pressures may ease by year-end

 “In terms of price increases, manufacturers are doing it in a thoughtful way,” Louis said. “Most companies aren’t increasing prices to increase margins. Most of it is to offset costs. It will be interesting to see, when we establish higher pricing and raw materials start to moderate a bit, what will happen to that higher pricing.”

The National Retail Federation said in a Monday announcement that April was the busiest on record at the nation’s retail container ports, with May possibly setting a record.

“There’s no shortage of demand from consumers, but there continues to be shortages of labor, equipment and shipping capacity to meet that demand,” said Jonathan Gold, vice president for supply chain and customs policy at the organization.

“Supply chain disruptions, port congestion and rising shipping costs could continue to be challenges through the end of the year.”

Cowen analysts, in their State of the Ports report, describe “a fight for equipment and space,” a lack of drivers and high fees for “dwell times,” with shippers unable to move freight.

“While the backlog has been partially worked through, there are still huge (triple digit growth year-over-year and double-digit growth compared to 2019) volumes coming in the ports,” the June 3 report said.

“Port workers, warehouse workers, and other essential transportation workers are finally getting vaccinated (75-80%) which has also allowed the ports to improve productivity.”

And: U.S. consumer prices soar again and push CPI inflation rate to 13-year high

Mikey Vu, partner with retail and operations practices at Bain & Co., says there has been a shift since the beginning of the pandemic now that consumers are shopping increasingly online and companies have solved some of the problems that arose early in the pandemic.

But more change is necessary.

In a Bain report titled “It’s Time to Build Resilience into Retail and Consumer Goods Supply Chains,” researchers note that 67% of companies in these categories expect to bring supply chain managers into the decision-making process after COVID-19.

“We are seeing an overwhelming majority of retailers say they’re going to increase investment and make major changes to supply chain,” Vu, one of the researchers on the report, told MarketWatch.

Companies are still sorting out what consumer behaviors will stick post-pandemic, what will revert to pre-COVID behaviors and how businesses can best meet demand.

“Retailers know there’s a range of outcomes and have been preparing,” he said. “I don’t expect us to see as dire of inventory issues as we saw at the beginning of the pandemic. That said, the consumer experience will be slightly different from pre-pandemic.”

$ 163.77
-1.01 -0.61%
Volume: 1.27M
Sept. 21, 2021 4:00p
P/E Ratio
Dividend Yield
Market Cap
$20.24 billion
Rev. per Employee
$ 134.50
-0.01 -0.0074%
Volume: 2.08M
Sept. 21, 2021 4:04p
P/E Ratio
Dividend Yield
Market Cap
$45.30 billion
Rev. per Employee
$ 41.32
-0.38 -0.91%
Volume: 1.92M
Sept. 21, 2021 4:04p
P/E Ratio
Dividend Yield
Market Cap
$22.62 billion
Rev. per Employee
$ 143.11
+0.22 +0.15%
Volume: 6.65M
Sept. 21, 2021 4:02p
P/E Ratio
Dividend Yield
Market Cap
$346.98 billion
Rev. per Employee

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