Supply Lines: Delivering the goods

Supply Lines

The pressure is on for U.S. retailers: Orders are surging for the holiday shopping season, and this is sparking a wave of demand for services such as in-store and curb-side pickup.

These offerings were hastily rolled out and scaled up by retailers like Kohl's, Gap and Macy's earlier this year to promote social distancing but they haven't really been battle-tested. Now companies have to get it right or risk alienating shoppers during a year that's already been disastrous.

Data show companies have cause for concern. More than half of U.S. shoppers said they wouldn't buy from a store again if they were unsatisfied with the delivery experience, according to a September survey from Accenture. Online sales are expected to jump 33% to $189 billion, testing the limits of fulfillment networks across the U.S., according to Adobe Analytics.

At issue is the smooth-functioning of the last leg of supply chains, which have struggled to avoid bottlenecks, prevent shortages, and adapt to new demand patterns and delivery needs during the pandemic.

David Silverman, a retail analyst at Fitch Ratings, said he's concerned that new programs adopted by retailers may not be precise enough for them to accurately report inventory and limit delays and snags, which could potentially limit sales.

"These companies are used to somewhat regular patterns," he said. "All of that has gone out of the window."

The world gets a closer look at how retailers are coping with the problem this week, when Kohl's and Macy's report quarterly results. Big-box retailers like Walmart and Target, which have broadly benefitted from consumer stockpiling and seene-commerce surge, will also report results.

Jordyn Holman in Atlanta and Kim Bhasin in New York

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Charting the New Economy

The next U.S. administration's options range from continuing with the "America First" strategy that has hurt trade to re-engaging with the global economy, and the decision will have far-reaching consequences. Calculations by Bloomberg Economics show that by 2050, global gross domestic product would be $31 trillion smaller in a scenario that sees ties splinter back to the level before China joined the World Trade Organization in 2001 versus one where the U.S. and other major economies commit to globalization. That amount is the equivalent to giving up the entire annual output of the U.S., Japan and Germany.

Today's Must Reads

  • Biggest yet | Asia Pacific nations including China, Japan and South Korea on Sunday signed the world's largest regional free-trade agreement, encompassing nearly a third of the world's population and gross domestic product.
  • Freight recovery | Freight carriers including container shippers and cargo airlines say global demand is building toward a seasonal peak that could outstrip last year's as online consumer spending surges during the Covid-19 pandemic.
  • Bouncing back | China's economic rebound gathered pace in October, cementing the nation's status as the only major economy expected to grow this year. The U.S. government, meanwhile, may announced more sanctions or trade restrictions against more Chinese companies.
  • Milk money | American dairy producers are renewing pressure on Washington to pursue trade deals that create "a more level and consistent global playing field" for the U.S. industry.
  • Up in the air | French Finance Minister Bruno Le Maire said the European Union and the U.S. can reach a compromise soon in the long-running dispute on subsidies to aircraft makers Boeing and Airbus.
  • Still more | The U.K. hinted that Brexit talks could stretch out beyond this week as the two sides struggle to overcome the key barriers to reaching a trade deal. Meanwhile, read about the winners and losers in the crippled British economy.
  • Blue steel | The American steel industry is shifting its focus from tariffs to infrastructure, pressing President-elect Joe Biden's team for a major package that it says could add at least 3 million jobs.

On the Bloomberg Terminal

  • RCEP effects | The trade deal signed by China, Japan, South Korea, and 12 other Asian-Pacific countries is unlikely to have short-term impact on markets, but Bloomberg Intelligence sees significant longer-term implications on growth and policy.
  • Slowdown continues | High-frequency data show a deepening drop in trade, with the volume of goods arriving at U.S. ports in the four weeks through Nov. 5 down 10.5% from January levels, Bloomberg Economics says.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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