Costco limits purchases of toilet rolls, cleaning products and water


Shoppers looking to buy anything from electronics to sneakers to automobiles - and even household staples like toilet paper - could be out of luck as retailers face a dire combination of supply chain problems, labor shortages and inflationary pressures with the holiday season fast approaching.

Costco on Thursday said it was reinstating limits on purchases of toilet paper, paper towels and bottled water.

Nike is struggling to find enough shipping containers to deliver its merchandise from overseas.

And General Motors said it would cut production at its plants in Indiana, Missouri and Tennessee this month because of the dearth of microchips. Ford Motor is also reducing truck production.

The moves come as Americans are getting ready to loosen their purse strings and hit the stores ahead of the fall and winter holidays.

A resurgence in COVID-19 cases had led to hording of household essentials last year during lockdowns, forcing Costco to put limits on purchases of some household goods.

While there was a shortage of cleaning supplies even last year, transportation issues this year are causing delays in deliveries to stores despite suppliers having plenty of stock, Costco Chief Financial Officer Richard Galanti said in an earnings call.

'A year ago there was a shortage of merchandise,' Galanti said. 'Now they’ve got plenty of merchandise but there’s two- or three-week delays on getting it delivered because there’s a limit on short-term changes to trucking and delivery needs of the suppliers, so it really is all over the board.'

The pandemic-driven port congestion and labor shortages have forced retail chains including Costco to spend more on transportation and labor, digging into their margins.

Galanti said the bulk retail chain is placing orders early to restock merchandise. The company also has chartered three ships for 2022 that will transport containers laden with goods between Asia, the US and Canada. Each vessel is capable of carrying 800 to 1,000 containers at a time.

Costco is not alone: the global furniture giant Ikea has purchased its own shipping containers to move merchandise. And like Costco, Walmart has also chartered ships to keep its stores well stocked ahead of the holidays.

Speaking at a conference earlier this month, Walmart CEO Doug McMillon said that supply chain problems and inventory shortages are as severe as he can remember in his 30 years in the business.

In a bid to strengthen it's supply chain, the mega-retailer is looking to hire an additional 20,000 workers to fill full-time and part-time positions in 250 Walmart and Sam's Club stores across the US, reported Fox Business.

Walmart is still facing skyrocketing labor and shipping costs amid supply chain backlogs.

Costco said it was paying six times for containers and shipping due to price increase on items shipped overseas; up to 8 per cent more for paper goods; as much as 11 per cent for plastic and resin products, including trash bacs and cups, and 3 to 10 per cent more for apparel, reported Fox Business.

A 40-foot container cost less than $2,000 to transport goods from Asia to the U. S. two years ago. Today, the service could cost as much as $25,000 if an importer pays a premium for on-time delivery, which is a luxury, according to Bloomberg Businessweek.

Prices also have gone up other popular products, including aluminum foil, soda, meat, oil and coffee.

Due to a severe worldwide computer chip shortage, Galanti warned that customers should expect delays and shortages on appliances and electronics, including computers, tablets and video games.

Galanti estimated that Costco's price inflation for its produc... (Read more)

Submitted 29 days ago

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