麻豆传媒映画retailers are bracing for supply shortages as the coronavirus (COVID-19) continues to slow production in China, and the Port of 麻豆传媒映画and railway lines face disruption from protests over the Coastal GasLink pipeline.
鈥淲e have two very different sets of problems,鈥� said University of British Columbia Sauder School of Business professor Mahesh Nagarajan.
One, the protest movement in Canada, 鈥渋s more controllable and manageable and is something that is prone to dialogue and mediation,鈥� Nagarajan said. 鈥淭he other, related to COVID-19, is completely unpredictable 鈥� but they both have similar effects.鈥�
Effects from blockades that prevent goods from freely flowing have yet to hit most Metro 麻豆传媒映画stores. Nagarajan said goods will undoubtedly be stuck in transit on freighters, resulting in some empty shelves, but he doubts that retailers will suddenly raise prices.
Perishable goods shortages are likely to happen first because, by definition, retailers cannot stockpile those products.
Inventory shortages caused by the COVID-19 virus, in contrast, stem from two separate phenomena, explained Nagarajan, whose research area is supply-chain logistics.
First comes panic buying and hoarding. Local retailers have struggled to keep hand sanitizer and face masks in stock since early January, when reports started circulating about the disease. COVID-19 has killed at least 2,810 people worldwide and infected at least 82,756 people, according to the Johns Hopkins University Whiting School of Engineering.
Even antiseptics such as rubbing alcohol have been out of stock at many London Drugs stores in recent weeks.
Canada鈥檚 chief medical officer, Theresa Tam, last week amped up concerns by saying individuals should prepare for a COVID-19 outbreak. Others,聽such as Canadian Health Minister Patty Hajdu, told聽media that people should stock up on non-perishable food, thereby prompting episodes of consumer panic buying and product hoarding.
Many Vancouverites then,聽during聽the Feb. 29聽and March 1 weekend, sent聽images and posts聽on social media platforms to show that retailers聽were doing a brisk business in supplies such as grocery staples and聽toilet paper, and to suggest聽that people could be preparing for COVID-19.
If the number of cases in B.C. (currently eight)聽continues to rise, or concern about the virus ramps up given that in neighbouring Washington State there were聽six deaths and 18 reported cases as of March 2, the聽retail trend聽in the province聽could mirror what happened in Hong Kong in January, when the virus first started to be detected in that region.
Hong Kong's聽Census and Statistics Department聽released data on March 2 to show that its聽retail sales聽fell 21 per cent in January, compared to January 2019, but grocery sales during the month were up 10.2 per cent.
Demand for consumer staples in Hong Kong then led to shortages and spurred incidents such as one in mid-February in which a knife-wielding man robbed a delivery driver of hundreds of rolls of toilet paper.
B.C.'s provincial health officer Bonnie Henry on Feb. 29 told media that she did not think that B.C. was yet at a point where people need to聽rush out to聽stockpile and hoard things. And Tam, on a March聽2 call with media, moderated聽her remarks by saying that聽"Canadians have time to be prepared."
Time will tell if that is enough to stem panic purchases.聽
Nagarajan said surgical masks are likely聽to be in short supply not only because of hoarding, but also because quarantines have likely shut some Chinese factories that produce the masks.
鈥淚f we don鈥檛 quickly come up with an alternative source of surgical masks, we鈥檙e going to have surgeries getting cancelled,鈥� he said. 鈥淭hat鈥檚 a nightmare.鈥�
Vancouver-based clothing retailers appear to be spared from supply-chain glitches so far.聽
Lululemon Athletica, Aritzia Inc. and the Amer Sports division Arc鈥橳eryx all likely shipped spring inventory out of Chinese factories before the Jan. 25 Lunar New Year, when lockdowns and quarantines started to ramp up, Lululemon founder and Amer Sports investor Chip Wilson told Business in Vancouver.
鈥淣obody鈥檚 in any kind of desperate situation from a retail point of view over here,鈥� he said. 鈥淚 expect [the retail apparel sector] will see a shortage of product for August through October 2020.鈥�
Most companies, including Lululemon, have shifted production out of China and into other countries, such as Vietnam, Cambodia and Bangladesh, Wilson added.
鈥淚 suspect most companies have 20 per cent to 30 per cent of production in China but I bet China production will start being for China retailing, and not exported,鈥� Wilson said.
Lululemon sources fabric from 28 countries and has 64 active cut-and-sew facilities in at least 15 countries, according to its website. The company closed all 38 of its Chinese stores by Feb. 3, but has since opened some on a reduced schedule.
鈥淒espite the current disruption to our growing business in聽China, we remain confident in the long-term opportunities this market holds for Lululemon,鈥� CEO Calvin McDonald said in a statement.
Wilson鈥檚 son, JJ Wilson, who is a principal at Ride Cycle Club, told BIV that he does not expect any product shortages because his clothing is not seasonal and can be stockpiled.
鈥淪ampling and prototyping is now starting to be delayed so I can only assume this will delay future bulk production at one point,鈥� he said. 鈥淚f I were a wholesale retailer, I鈥檇 be more worried as I would assume the brands I buy would prioritize their own stores and digital sites to maximize margins,鈥� he said.
Aritzia similarly has factories in China, according to Panjiva S&P Global Market Intelligence, but Aritzia told BIV in an email that its executives 鈥渁ren鈥檛 able to speak to our internal operations at this time.鈥澛�
