Victoria's Secret reports that nearly half of its holiday merchandise is stuck in transit jams that are part of the global supply chain crisis. What does this backup mean for your holiday season, and how does Victoria's Secret plan to fix it?
Victoria's Secret Holiday Products in Limbo
Some of buyers' favorite holiday gifts from the Victoria's Secret store and victoriassecret.com are not reaching retailers. Victoria's Secret reports a 30 percent drop in inventory of their popular pajama sets from last year, for example.
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While the current situation will take months to untangle, the visibility of the need for a solution is expected to help identify challenges, address supply chain workforce shortages and avoid another supply chain crisis in the future. I
According to CNN Business, Martin Waters, CEO of Victoria's Secret & Co, said the brand had to cancel 10 million inventory units as the merchandise was not expected to reach the U.S. Add to that over 100 cargo vessels full of merchandise stuck in port, and you begin to see the inventory shortages affecting holiday shopping for Victoria's Secret customers.
This is just part of a widespread bottleneck crippling the supply chain. Overall, dozens of ships are stuck trying to reach port on any given day, with each ship capable of holding between 10,000 and 20,000 cargo containers.
And cargo by air is delayed, as well. Inventory eventually reaching stores by air is taking more than four times the number of business days to reach its destination. All of this means low inventory and less selection for shoppers – and higher prices this holiday season.
Consider also: Will Supply Chain Back-Ups Complicate Gift Giving?
While President Biden attempted to ease supply chain problems by opening Los Angeles and Long Beach ports 24 hours per day, the increased hours aren't sustainable without all parts of the supply chain being fully staffed and ready to take on the overload.
The recently passed $1 billion infrastructure bill will help address some system flaws that helped the backup reach crisis status.
While the current situation will take months to untangle, the visibility of the need for a solution is expected to help identify challenges, address supply chain workforce shortages and avoid another supply chain crisis in the future. In the meantime, consumers will face low supply and the consequences that come with it.
How Holiday Pricing Is Affected
A company that prides itself on trends and newness, Victoria's Secret has been suffering through the same issues affecting many retailers since the onset of COVID-19. As more consumers turned to online shopping for even basic needs, retailers' supplies dwindled faster than demand went up – and new items aren't reaching stores.
Consider also: What We're Snapping Up During Quarantine - and What We Can't Get
Victoria's Secret, like other retailers, is spending more to get their products. The brand plans to put out $150 million for Q3 and Q4 to combat the pandemic-induced supply chain crisis.
The Impact on Victoria's Secret's Future
While some retailers, like Target and Walmart, have been absorbing the extra costs to keep consumer prices low, Victoria's Secret has raised price points to increase revenue. That is how they reported a 7 percent increase in sales in Q3 with significantly less inventory.
Wall Street is liking Victoria's Secret's approach and turnaround efforts, with BMO, Wells Faro and MKM rating Victoria's Secret & Co. common stock (VSCO) as anywhere from "buy" to "overweight," signaling their faith in the brand's ability to recover.
Aside from the coronavirus recovery efforts, Victoria's Secret has been working on changing its image to reach a broader and more diverse audience – a move that caused Nasdaq to call Victoria's Secret "a name to watch." If all goes well, these signs signal a better outlook for consumers in the coming year. And perhaps more pajamas in 2022.
What to Do Now
If you are looking for Victoria's Secret gifts this holiday season, act quickly and think ahead. Shop the brick-and-mortar Victoria's Secret store, as many shoppers are prepping to do. If the in-store experience isn't for you, shop early from victoriassecret.com and choose to pick up in-store, if available in your area.
To beat the increased prices, apply for the Victoria's Secret credit card to take advantage of new cardholder incentives. At Victoria's Secret and other retailers, shop sales, shop early and do a blend of in-person and online shopping to ensure you have the items you want this holiday season. If you're shipping any items, keep an eye on those deadlines and plan your mailing timeline accordingly.
Consider also: When Do You Need to Mail Your Holiday Packages?
- MarketWatch: Victoria’s Secret stock soars 11% on profit beat
- The New York Times: Biden Announces Measures at Major Ports to Battle Supply Chain Woes
- Forbes: Biden Administration Cites Progress in Addressing Supply Chain Issues
- MarketWatch: 70% of Gen Z Shoppers Plan to (Shop Brick and Mortar)
- Nasdaq.com: Can Victoria's Secret Rekindle Its Past Success?
- CNN Business: Everything you're waiting for is in these containers
- CNN Business: Nearly Half of Victoria's Secret's Holiday Products Have Been Stuck at Ports or in Transit
- CNBC: RETAIL With 30-year high inflation, investors reward the retailers willing to hike prices for shoppers
- RetailWire: Can Victoria’s Secret shift its brand image from sexy to empowering?