Consumers might want to stock up now on clothing and other supplies for the back-to-school season because retailers are preparing orders for August as manufacturers in China cope with coronavirus shutdowns and delays, Bloomberg News reported. And there might not be enough goods to go around. “Everybody will want to be back shopping, and that’s when the real inventory shortage will hit,” said Richard Maicki, a managing director at consulting firm Berkeley Research Group, who advises retail and consumer companies on turnaround plans. Factories are coming back online in China, said Stephen Lamar, chief executive officer of the American Apparel & Footwear Association, a nonprofit organization for retailers and suppliers. The trouble lies in the lag created by their downtime. The National Retail Federation on Monday said the virus may have a longer and larger impact on imports at major U.S. retail container ports than previously believed. Retailers and manufacturers have worked to diversify where they make their goods in recent years, a process accelerated last year by U.S. tariff increases on Chinese goods. But many components like buttons and fuses are still primarily made in China. It takes anywhere from two to six months to shift to another supplier, and many factories elsewhere “are not geared up to take the kind of potential capacity shift” needed, said Holly Etlin, a managing director at AlixPartners who works to turn around retailers and other troubled companies. She spoke on Tuesday on a webinar panel hosted by the American Bankruptcy Institute about the effect of the virus on supply chains. Read more.
Miss the special abiLIVE webinar lookin at supply chain disruption and other financial effects of the coronavirus? Watch a replay here.
What will the likely impact of the coronavirus COVID-19 be on the bankruptcy world? Read eight predictions in a special analysis from Stinson LLP's Thomas J. Salerno and Avion Holdings' G. Neil Elsey. Read it here.
