Retailers struggle to keep shelves stocked; seasonal sales could take a big hit

A buying frenzy has been underway across the country the past 10 days leaving retailer shelves picked clean each day for consumer staples like toilet paper, canned soup and dairy products.

The frenzy has been fueled by the COVID-19 (coronavirus) outbreak, which has infected more than 11,000 people in the U.S. and resulted in almost 170 deaths as of Thursday. Arkansas cases increased from 33 on Wednesday to 62 on Thursday (March 19).

Bentonville-based Walmart Inc., the nation’s largest grocery retailer by stores and volume, has one of the most efficient supply chains in the world and still can’t get the products it needs daily to fully meet customer demands. Walmart executives have said they are working with suppliers to get products as quickly as it can for its 4,700 stores in the U.S.

Thursday morning, as rain pounded Northwest Arkansas, Talk Business & Politics visited a Walmart Supercenter at 7 a.m. to stand in line to purchase toilet paper. The massive aisle was empty except for a few packages of Cottonelle moist wipes, which were quickly snapped up by shoppers there for the purposes of buying toilet paper, paper towels, eggs and other items that have been hard to get in recent days.

THE WAIT BEGINS
By 7:15 a.m., a line began to form near the toilet paper aisle at the back of the store with all eyes on the double-doors leading to the backroom. Conversation among the group began with comments like “I hope I don’t have to wait too long” and “I really need to get this today. I care for two elderly women and I have been waiting in the parking lot since 6:30 this morning for the truck to arrive.”

Another customer said she was told the prior day that Thursday’s shipment would probably come between 8 and 10 a.m. Talk Business & Politics was told the prior evening the daily shipment could arrive anytime between 8 a.m. and 3 p.m.

By 8 a.m., the line for the paper consumables grew to around 20 customers who waited for the product. Walmart store workers said the toilet paper products have been selling out within the first hour. The amount of product the store receives varies each day as the retail giant tries to ensure all stores get some product.

At 8:07 a.m., store management came down the aisle with a rolling cart of Charmin and Great Value large-pack rolls. Store management handed out one package to each person in line. Two other large rolling carts were then wheeled onto the aisle with Scotts and Angel Soft brands and employees worked hurriedly at one end of the aisle to stock the product on the shelf and also assist customers.

GONE IN LESS THAN TWO HOURS
As word spread across the store that toilet paper was back in stock, customers rushed in to get their allotment. Others phoned and texted their friends and neighbors to get to the store quickly if they needed the hot commodity. By 10 a.m., the toilet paper was totally sold out and management said the heavy rain likely kept some away because in past days the inventory didn’t last more than one hour.

Other products remain out-of-stock around the store and management could not say when they would get another shipment of paper towels. A similar scene was found as employees wheeled out the pallets of tissue boxes. The shelves were totally bare, but two employees worked to try and restock what they had, which was Puffs multipacks and Great Value multipacks. Thursday’s shipment was only about one-third of the product needed to fill the aisle. The toilet paper shipment was only enough to fill about one-quarter or the massive space it typically occupies in the Supercenter.

Eggs were also in short supply in the Supercenter, but the milk case was full. In the center of the store, employees worked to restock canned vegetables, soups, cereal and other foods. The fresh meat had a sparse inventory, with virtually no fresh turkey products. There was limited beef, but plenty of chicken, with most being the Tyson Foods brand.

Organic fresh vegetables and fruits were sparse and the aspirin/pain reliever aisle was also nearly bare.

‘BEYOND ANYONE’S WILDEST IMAGINATION’
Retail and supply chain professor Scott Benedict, on faculty at Texas A&M, said the demand Walmart and other grocery retailers are seeing is unprecedented. He said no amount of planning could have predicted that consumers would hoard commodities like toilet paper and paper towels.

Benedict spent more than 25 years in retail, with 18 at Walmart in various merchandising and operations for stores and online, as well as two years at BestBuy.com. He said Walmart’s efforts to streamline and reduce inventory over recent quarters was not putting the company at any disadvantage now, because demand is way more than those cuts.

“Walmart, nor any grocery retailer, would ever want to run out of consumables, because that’s lost sales,” he said. “When customers can’t get a staple item at a retailer, they will often walk and that retailer will lose a whole basket of sales. Retailers have been able to accurately peg demand for paper consumables for some time and ensure they have adequate stocks on hand at store or in warehouses. There is no way consumers today are using that much more paper products, they are hoarding or stockpiling beyond anyone’s wildest imagination.”

He said the households won’t need the product for an extended period of time and that’s also a problem for the supply chain. Benedict said plants are cranking out all the product they can, and when the buying frenzy halts, there will be a glut of product somewhere because consumers will suddenly realize they don’t need it.

“It’s not like cleaning or sanitizing agents will be used up during this outbreak. A person can only eat so much and use so much paper products. When the supply catches up with demand, we will have a surplus on our hands,” he said.

Benedict said the sales uptick in grocery and consumables won’t likely mean more profits for retailers because the COVID-19 impact will be a financial drag in the next couple of quarters. He said any gains from the recent buying frenzy will be offset by higher employee costs associated with extra staffing, and paying benefits to those directly impacted.

He said demand has been pulled forward in some categories and that will mean sales won’t occur later. He said other categories like seasonal (Easter) will likely be lost sales altogether.

“You aren’t likely to buy the kids a new Easter outfit if you aren’t going to church because of the social distancing guidelines,” he said.