February 18, 2020

U.S. Retail Supply Chain - Impact of Coronavirus

DG, DLTR, HD, LOW, ULTA
By Donna Crothers
OTR Global recently spoke with several retail suppliers about the early impact from the coronavirus and found that although current supplies are adequate for most sources, production has resumed at only a fraction of the normal capacity, which could lead to product shortages starting in the spring.

“Our factory started up on Monday, but we only have about 30% of our 800 workers back at the factory. The rest are all stranded in the provinces they visited due to travel bans in effect within China. Starting in about four weeks, we could start to see shortages -- that is probably the same with other companies as well.” Building materials supplier to The Home Depot Inc. and Lowe’s Cos. Inc.

“The coronavirus [COVID-19] is drastically affecting shipping. What I thought would be here in April will probably not be here until May. We are looking at 30- to -60-day delays right now. Every week we are trying to get updates.” Skincare and consumables supplier

“Several of our facilities in China have been instructed by the Chinese government to not return to work from the Chinese New Year until around Feb. 14. This may affect our supply and shipments. However, our supply chain team is sharing they will not know the results or implications until the Chinese return to work.” Building materials supplier

“We have some new products on store shelves and online, which, in the first two weeks that they have been available, have sold surprisingly well. If the strong sales trends and the plant closures due to coronavirus continue, we will run out of product. But given all the unknowns it is hard to say what will happen.” Ulta Beauty Inc. supplier

“We haven’t had an impact yet, but at some point I expect the ports will be backed up and delayed.” Dollar Tree Inc. supplier

"The products that are already made are still being shipped, but we are trying to place orders for fall right now. Some workers are working from home handling paperwork, but no one can go back until at least March 3 now.” Apparel supplier

“We need to have product in stores in early April for Mother’s Day, and I don’t think that is going to happen. I think the coronavirus is going to have a huge impact on the supply chain.” Outdoor products supplier

“Lowe’s is experiencing supply challenges in key areas, so they are assessing the coronavirus. They sent out [an] email asking for full transparency on the risks and want to know what specific items they need to be concerned about.” Lowe’s supplier

“There could be some repercussions from the coronavirus in terms of pricing, but we don’t see anything yet.” Building materials supplier

"The factory workers are not making product. This will be a bigger deal on fall orders and may delay shipments." Dollar Tree supplier

"The situation is getting worse but just being covered up by the Chinese government. Don't trust the numbers you see in the news -- it’s far worse than that. Our factory is operating, but half of the workers have not been able to return yet. Hence, production will be slower than it normally is." Chinese plastics manufacturer

“We sell to virtually everyone in the country, and the coronavirus may help our wholesale business as we pick up some business from importers.” Supplier to Lowe’s and Home Depot

“China extended the New Year by a week to keep people from gathering at work because of the coronavirus. We’re a bit low on parts and pieces, so I’m getting a little worried.” Supplier to Lowe’s and Home Depot 

“So far, there has been no impact to our business because of the coronavirus, but with the [Chinese] New Year being extended, I have to think we’ll see some down the road.” Home Depot Supplier

“The coronavirus hasn’t done much yet, but it will affect us.  Even if they re-open all these factories on Feb. 10, not all the workers can come back. If they can’t get orders filled in March and April, it will be a problem.” Home Depot Supplier

“Our Home Depot orders are not affected by coronavirus because all of our Home Depot products are made in the USA.” Home Depot Supplier

“We are supposed to get some shipments from China, but those have been delayed a couple of weeks [as of first week in February].” Supplier to Lowe’s and Home Depot

“At this point there’s no impact to pricing. Shipments were made to the customers’ warehouse in mid-January and so far we are OK. But if the coronavirus continues very long, shipments will be impacted, but I’m not sure how or if pricing will be effected.” Ulta Supplier

“Our manufacturers have told us [as of Feb. 11] that they are not working -- at least, three of four are not up and running, and one is.” Ulta Supplier

“[Between] 50% and 70% of our inventory is made in China, so, yes, I am worried.” Ulta Supplier