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Balancing act – mitigating supply chain risks presents retailers with a holiday dilemma

I recently appeared on NPR’s Marketplace Morning Report to discuss the challenge facing retailers looking to avoid supply issues during the winter holiday season.

With Memorial Day only a week or so behind us it may seem surprising that retailers are thinking ahead to the festive period already. However, the pandemic exposed some significant frailties in global supply chains and, after a bruising year in terms of sales, retailers will be looking to mitigate potential losses as much as possible.

This does present a dilemma. Some items are guaranteed to sell – the holiday staples, decorations etc – others such as apparel and electronics (the latter in a particularly precarious position given the global challenges around semiconductors) less so.

Retailers will need to take some calculated risks in terms of purchasing but those that make bad bets may end up with an unwanted surplus to add to their post-pandemic woes.

The Biden administration just announced a plan to strengthen critical supply chains, which have been weakened during the pandemic. Meanwhile, given bottlenecks caused by pandemic distortions of factory output and our buying habits, retailers already buying for the 2021 holiday season are facing shortages and delays of computer chips, plastics and more.

Tags

retail, consumer products, supply chain, operations

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