The news: Many retailers have recently warned that a number of challenges—inflation, supply chain woes, and global unrest—are converging to make for a difficult near-term environment.
- Costco Wholesale noted it is combating growing labor and freight costs.
- Gap said shipping and rising prices will persist at least through the first half of the year.
- Urban Outfitters expects supply chain costs to remain elevated through the remainder of its fiscal year 2023.
More on this: This year may well be a tale of two halves, with a difficult environment in the first part of the year and easier terrain in the latter half.
- There are a number of supply chain disruptions ranging from the interrupted supply of basic materials to factory and port closures in China, as well as congested port operations and labor contract negotiations in the United States, per Barron’s. That’s left retailers such as Best Buy struggling to keep items in stock.
- While inflation was initially stoked by supply-chain problems during the pandemic, Russia’s invasion may prolong those issues and push up energy costs, per The New York Times.
- The tight labor market is making it difficult to attract and retain retail and supply chain workers.
- Many workers have not seen their incomes keep up with inflation. Consumer prices rose 7.5% in January from a year earlier, the fastest pace in four decades, according to the U.S. Bureau of Labor Statistics. And wages were flat in February.
While those challenges are likely to persist in the short term, retailers are increasingly optimistic about the latter part of the year as the pandemic subsides.