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Retailers worry hot Christmas products will be held up by Calif. port strikes
By Andria Cheng, December 4, 2012
As the work stoppage at the ports of Los Angeles and Long Beach entered its second week, retailers in the midst of their critical holiday season are among those with most at stake.
The National Retail Federation joined dozens of groups in the manufacturing, agriculture, wholesale, transportation and logistics industries this week in a joint letter to the While House Tuesday calling on the Obama administration to intervene.
NRF spokesman Stephen Schatz said the ports handle 40% of all U.S. commerce and are the destination for goods coming from Asia and Australia. The holiday season represents 20% to 40% of retailers’ annual sales, he said.
“The thing we are worried about is the hot product,” Schatz said. “Retailers are going to have to restock. That’s gonna definitely affect retailers and consumers. This is a critical time. Our (retail) members are very concerned. Retailers are already making decisions on shipping and product diversion.”
Retail chains across the board have been trying to keep their inventory lean, which means a timely and smooth-running supply chain is even more important. Inventory as a percentage of assets among smaller retailers, for instance, has declined each year to 43.85% this year from 45.63% in 2007, according to Sageworks data.
Target Corp., for instance, said it’s “actively monitoring” the situation. Target said it continues to use the Los Angeles terminals that remain open and has rerouted other shipments to Seattle.
“All of Target’s holiday merchandise is already in our domestic supply chain, so we do not anticipate this issue will impact our guests and their holiday shopping at Target,” spokeswoman Molly Snyder said.
Gap Inc. spokeswoman Edie Kissko said the company has spoken to several Congressional staff, people close to Los Angeles mayor’s office and the Harbor Employer’s association. “A prolonged strike could impact our ability to get product to our stores in time for our customer’s holiday needs,” Kissko said, declining to provide more details.
Nike Inc., Best Buy and Toys “R” Us declined to comment.
Wal-Mart Stores Inc. and Macy’s Inc. didn’t respond to requests for comment.
NRF said ocean carriers in the past six days have also begun to divert cargo to Mexico and Canada. In 2002, the 10-day West Coast port lockout and labor dispute cost the U.S. economy $1 billion a day, the group said in the joint letter to the President.
Some retailers “might have a limited amount of product destined for stores this month caught up in the port or new spring product due in stores later in December or January,” said Caris & Co. analyst Dorothy Lakner, adding a more prolonged strike and/or one involving more ports “could impede product flows” for the first quarter or spring.
“It’s not something retailers want as they worry about the Fiscal Cliff and a still fragile economic recovery,” the analyst noted.
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