Inflation remains high in USA, retailers trying to clear inventories even the year-end sales season approaches.
By Jennifer Chang Photo：Alexander Isreb
The supply chain crisis in the U.S. emerged in early 2020 and intensified in the following year due to multiple factors such as the new crown epidemic and the trade war launched by the U.S. government. Towards the end of the year, ports are congested, cargo ships are stranded, containers are piled up, and due to the lack of automation in ports, shortage of cargo tools and manpower, cargo transportation is repeatedly delayed, resulting in some supermarkets with empty shelves. The supply chain crisis continues to ferment last year many people in the United States even Christmas trees are difficult to buy, who expected a year after the turn of events: many retailers received Christmas orders in January and February this year, resulting in a surplus of Christmas decorations inventory this year, because everything is too late.
The U.S. year-end sales season is approaching; last year, retailers were faced with empty shelves and struggled to meet consumer demand; this year, however, inventories are full, especially for apparel and home furnishings, but sales have plummeted forcing owners to put products on consignment sites, hold sample sales, offer discounts, give them to employees, and even discard them for scrap. More headaches for many U.S. retailers, with the current inflation rate soaring to a 40-year high, many household budgets are under increased pressure. Consumers may be careful to live, will not spend so much money. UBS analysts said that retail operators must discount promotions, but labor costs are still high, so that the rate of profitability was hit by a double whammy. Warehouse industry is also affected, October employment has been reduced by 20,000 people, the rate of decline is the most since April 2020. Garment manufacturing and other industries have seen a reduction in overtime hours for workers, resulting in shrinking paychecks. With goods piling up at the two major ports in Southern California, the warehouse space is only 0.2% empty, well below the 4-6% of previous years at this time. These are the latest games, technology products and apparel, more trendy than the products in stores and websites, but have to cool in the warehouse. Analysts and warehousers say it may take most of next year to absorb the pressure of excess inventory.
The U.S. inflation continues to be high and consumers' purchasing power is declining, so businesses are having to rack their brains to clear their inventories. Some stores are asking owners to simply throw away their goods, give them to others, or give them to recyclers simply because they don't want to pay more for storage, warehouse owners said. This year, retailers' orders have dropped by more than 30% compared to last year, but the amount of inventory has increased by 50%, so many stores are taking inventory into account in the loss account. Economists point out that in the next few quarters, due to the reduction in inventory, may drag down the U.S. gross domestic product (GDP) growth rate, making the economy even worse. Delayed or cancelled orders will also impact the labor market, reducing the number of hours or job opportunities for workers across the supply chain. Retailers cancelling orders, causing a sharp drop in global trade growth and stalling factory production
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