Supply Chain Delays Continue To Hurt Small Business As Big Stores Report High Retail Sales
Size can solve a lot of problems in the business world, and that was proven once again this week as major retailers like Walmart, Target and Lowe’s all produced strong quarterly sales and earnings results despite the supply-chain problems that continue to plague the industry.
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Walmart’s massive size proved particularly useful during its fiscal third quarter, when it was able to negotiate with manufacturers, increase its inventory and charter its own ships to move goods around the world, CNBC reported.
On the other end of the spectrum, small businesses continue to get hurt by supply chain delays. Nearly half of all small businesses in the United States said they faced some level of supplier delays during the week of Oct. 11-17, according to the U.S. Census Bureau Small Business Pulse Survey. That’s up from 26.7% during the first week of 2021, Fox Business reported.
In many cases, small businesses can’t even get merchandise to sell. As the Washington Post noted, independent shop owners are often the last in line because manufacturers give priority to behemoths like Walmart, Target and Amazon.
“The message in the toy business has always been: Walmart and Target first,” Sean Maharaj, managing director at consulting firm AArete and a former supply chain analyst for Mattel, told the WaPo. “As a toymaker, once you miss your opportunity with a large outlet or have an out-of-stock, you end up on their black list. That’s enough to sink your business.”
This is not a new problem, but it has been exacerbated by supply chain delays and the COVID-19 pandemic. In March, 44% of small businesses reported shortages due to disruptions in the supply chain, GOBankingRates reported.
Meanwhile, about 800,000 small businesses closed permanently during the first year of the pandemic, according to Federal Reserve data. That’s about 30% more than is typical. More than three-quarters of small businesses had to get federal emergency assistance last year, according to the National Federation of Independent Businesses.
But many of those lifelines are no longer available, leaving small businesses without enough capital to compete with larger companies.
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“The factories are backed up and it’s a fight for capacity, with the bigger guys offering incentives and donations, saying ‘I’ll give you an extra $5 apiece to put my orders in front,'” Kimberley Smith, chief supply chain officer apparel company Everlane, told the Washington Post. “The norms are very different than they were six or 12 months ago.”
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