Early last month, on Labor Day weekend in fact, i was surprised to see a flier from a local shopping center urging customers to "come celebrate the start of the holiday season with us."
My first reaction was a sort of laughing resignation. Once the holidays began with Thanksgiving. Then Columbus Day. Now Labor Day?
Then, it dawned on me what was going on: It's the supply chain. I'd earlier reported that the National Retail Federation's monthly Port Tracker predicted that the major U.S. ports would see fall-like volumes in August. That's a result of a couple of things. Retailers have tried to stretch the shipping season as a way to avoid creating the sort of port congestion that raised havoc on the West Coast in 2004. In addition, with rail and trucking capacity relatively tight, spreading out the flow of goods is a way of assuring they'll have capacity when it's needed.
But Christmas goods arriving in the DCs in August create another set of problems. With most consumers still thinking about a last weekend at the beach rather than tinsel and toys, there's bound to be a lot of inventory piling up on DC and store shelves. That means higher inventory carrying costs and overcrowded DCs. Enter the marketing and merchandising folks, who understand cash flow and working capital issues as well as their supply chain colleagues do. If the goods are available, it makes sense to call shoppers' attention to the fact with various promotions, sales and so on. Extending the Christmas season isn't so much a push for additional sales as it is an inventory management tactic.
Now, I have to admit this is all conjecture on my part. I haven't yet seen whether those August port numbers were as high as expected, or whether consumers are responding to retailers' urgings. I do have one bit of anecdotal evidence. I live not too far from a very popular shopping center, where some of the nation's higher-end retailers operate outlet stores. When the center had its annual "sidewalk sale" a couple of weeks ago, by midday, the cars trying to get to the mall backed up traffic onto the nearby Interstate and drivers simply trying to pass the mall waited in traffic for 20 minutes or more.
That sort of crowd bodes well for the retailers. And if DCs find that they were able to spread the flow of goods out to the stores, that's good news for them as well—less overtime, less scrambling for seasonal labor being among the benefits. As for me, sorry, I can't help. I'll think about Christmas shopping, uh, later.
