By David DiMolfetta
Prevailing supply chain constraints from COVID-19 and the Suez Canal blockage in March will affect the number of choices available to consumers in clothing retail stores.
From lack of travel and decreased spending on experiences amid the pandemic, it’s no secret the potential for consumer spending is colossal in the coming months. Households in the U.S. saved $1.5 trillion since locking down last year, a number greater than the average annual growth in the gross domestic product (GDP) equivalent to South Korea’s output. Bloomberg Economics data indicated that all the money saved in the past year would propel economic growth to as much as 9% rather than the 4.6% currently projected for 2021 GDP.
Now, a rush of retail orders is putting added pressure on the supply chain space that has been grappling with Covid-related affairs for over a year. A National Retail Federation (NRF) survey conducted in March before the Suez blockage indicated that 98% of surveyed retailers said they had been impacted by port or other shipping delays. More than half said such congestions are adding at least three weeks to their supply chains.
The Suez Canal blockage, where 400-meter-long shipping vessel Ever Given blocked all traffic passing through the major trade waterway for nearly a week in late March, has backlogged retail orders to the nth degree. This means consumers will have to pay more for their desired fashion choices or find alternatives to the clothing that’s become unavailable from shipping logjams.
“Global trade in April is likely to be focused on the recovery from the Suez Canal blockage,” Panjiva, the supply chain research arm of S&P Global Market Intelligence, said in a monthly report. “The pressure on shipping through the canal has waned, but the disruptions to shipping schedules and downstream supply chain operations could last for months.”
Signs of delays are already showing. The Journal noted that Calvin Klein’s parent company PVH said in a recent filing that the global vessel and container shortage had delayed spring inventory arrival. It leaves retailers in a unique problem for their relationships with customers: sell inventory at full price but risk demand for goods, or implement discounts on all inventory to attract more shoppers but risk losing available inventory faster.
Clothing is just one of many areas impacted by supply issues this past year. Commodities, notably coffee, grain, and soybeans, are also being slammed in the process. In the U.S., a worldwide semiconductor shortage is also grappling with the availability of vehicles.
