Both Lululemon and Dick’s Sporting Goods cited challenges with factories in Vietnam facing COVID-19-related closures on top of the longer shipping times, according to recent earnings calls and investor conferences.
Both retailers said they are shipping some products by air to avoid delays, and Lululemon is shifting some production out of Vietnam.
Walmart and Target chartered ships just for their goods in hopes of trimming transit times. Both are placing larger orders earlier in the season, though Walmart CEO Doug McMillon said at an investor conference earlier this month that the company “would take even more inventory if we could get it, especially in some categories.”
McMillon said the supply chain disruption is “more dramatic” than he can remember. “There have been various challenges, but not anything like this.”
The supply chain issues could make big holiday discounts more scarce.
Transportation costs have “exploded,” said Douglas Kent, executive vice president of the Chicago-based Association for Supply Chain Management. Companies are paying as much as 10 times more to transport a shipping container’s worth of goods than they did two years ago, and shortages of workers are pushing wages up, he said.
“Somebody has to pay for that,” he said.
While supply chain companies are trying to recruit more truck drivers and port and warehouse workers, retailers are scrambling to staff up ahead of the holiday rush. Amazon, Kohl’s, Dick’s Sporting Goods and Gurnee Mills mall all held hiring events in recent days.
Retailers have made fewer big seasonal hiring announcements than usual, but that’s likely because many have been in hiring mode for months, said Andy Challenger, vice president at Chicago-based outplacement firm Challenger, Gray & Christmas.
The firm expects retailers to add about 700,000 workers this holiday season.