Posted Date: 11/20/2012

How Did Sandy Affect the Retail Supply Chain?

Importers and manufacturers who sell to America's major retailers continue to be optimistic regarding a strong fourth quarter and holiday shopping season, according to Capital Business Credit (CBC), a non-bank lender that services the retail sector.

According to the quarterly Global Retail Manufacturers and Importers Survey, 74 percent of importers of retail goods believe the winter/holiday season will be the same or stronger than last year. Of those who believe it will be stronger, the majority estimate that sales will increase by more than three percent compared to last year. Respondents indicated that Black Friday will continue to be the busiest shopping day of the season with Cyber Monday and the day after Christmas tied at a distant second.

"Importers continue to be optimistic about the most important quarter in the retail calendar," said Andrew Tananbaum, executive chairman at CBC. "It appears that retailers are purchasing and selling more merchandise than in 2011 which is not only encouraging for the sector but for the overall economy."

Super Storm Sandy
When asked if Super Storm Sandy will impact holiday retail sales in general, 50 percent indicated that it would have no impact and a third indicated it would have a negative effect. However, for November specifically, Super Storm Sandy will have a negative impact on 45 percent of importers' businesses.

Other Super Storm Sandy data includes:

• A little less than half of respondents did indicate that Sandy has made it more difficult to ship goods (44 percent)
• A third (32 percent) said that it may decrease the number of re-orders retailers place to replenish fall merchandise

"It appears that Sandy was not as catastrophic to importers' businesses as it has been to other industries," Tananbaum said. "As importers and retailers no longer overstock merchandise, the storm's impact was less devastating than it could have been. However, we do suspect that some companies may have lost merchandise that was in their warehouse."

Tananbaum continued, "While respondents did indicate that it has been more difficult to ship goods, they have not reported major problems or bottlenecks at the ports where their merchandise arrives. We consider this very lucky."

Fall (August through October, 2012)
The Fall 2012 retail season was a successful one for importers of retail goods with 42 percent indicating sales were better than last year and a quarter (27 percent) indicating it would be the same as the prior year.

Additional survey findings for fall:

• Sixty-two percent of respondents indicated that they were receiving re-orders for fall merchandise from retailers
• While 56 percent said that retailers did rely on discounting to move merchandise, 40 percent of those respondents indicated it was less than last year
• On a disappointing note, the majority of respondents (77 percent) indicated that their retail customers continue to ask for charge backs, discounts and allowances, indicating that net margins may be impacted