Navigating the New Supply and Demand Landscape

The last few years have brought massive changes to the supply and demand landscape and many of these changes have left fiascos in their wake. Challenges have arisen from Covid lockdowns in China, port congestion, container availability, worker shortages, equipment issues, war, and changes in consumer buying habits. 

Retailers have struggled to keep up, and now, the trend has swung in the other direction as many are facing overstock issues. 

For a time, it seemed as if to get a portion of what they needed, retailers had to order double the amount of inventory and make do with however much of their order was fulfilled. Now, as production is ramping back up and more orders are being filled, and retailers are still over-ordering just to make sure they have stock for big shopping events like back-to-school which is leading to overstocking. Consumers who were previously turning their discretionary income toward commerce, are now pulling back due to fears of an impending recession.

The GDP has shrunk for the second straight quarter, which is usually the signifier of a recession. However, the job market remains strong, which is another indicator of the health of our economy. 

Consumer spending numbers are showing growth, but that could be due to inflation and not actual spending activity as we’re seeing these overstocked big retailers unable to move inventory. 

The Wall Street Journal reported Associate Professor of Logistics at Michigan State University’s Eli Broad College of Business Jason Miller as saying: “the surplus of inventory is largely hitting general merchandise stores, including retailers like Target Corp. , Walmart Inc., Kohl’s Corp. and Macy’s Inc., that turn over large amounts of goods based on seasonal patterns and consumer shopping trends.”

A 3PL solution could help with inventory slack and constraints. SecurCapital has resources to help overcome seasonal and economic cycle challenges.