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Notice how, two and a half years later, a shocking number of things vanish from shelves for weeks at a time with a sign of “Due to supply chain issues, XXXX is out of stock for the time being”, only for them to return unexpectedly and have the item next to them suffer the same shortly after? While I recognize that supply chain issues are still very much a real thing, I am also starting to suspect that companies are also using it as a convenient excuse to further min-max profits on already tight margins.

Both the retail and the food service industry, for example, are notorious for their incredibly tight margins. They often rely on things like “loss-leaders” to drive sales that can be offset by other mundane items with much higher margins, resulting in an end result that is generally profitable. However, all of this happens in a highly delicate balance that can fall apart quite easily if not careful.

In many cases, years ago and long before the days of COVID, some of these companies had painted themselves into a corner where they were forced to maintain this delicate balance, at risk of a major impact on their overall sales if they were to institute any major changes, since as we all know consumers hate change. But now, with the upheaval of the supply markets over the last two years due to COVID, it seems plausible to me that many companies are doing some hand-waving and blaming convenient supply chain issues on things that aren’t really directly impacted by that. It’s a convenient excuse to remove some of the more extreme tight margin items and loss-leaders from the equation, until favorable market conditions allow them to periodically bring them back in.

Think McRib, but on a more aggressive and dynamic schedule across your entire inventory. Why carry 5 flavors of chips in stock, when 1 of the 5 only has a 2% markup even though it’s the top seller, when instead you can carry 4 and only buy a handful of the 5th every 6-8 weeks after you’ve had a particularly good month and can splurge? In the past dropping that item, as the number 1 seller, would have cost you sales and long term repeat customers, but slap up a “Sorry due to supply chain issues, XYZ is out of stock for the next few weeks” and everyone shrugs and blames the pandemic and assumes you have no agency over the decision and goes about their day.

I’m suspicious that these coming and going waves of “we’re sorry item XYZ will not be available for the next few weeks”, only for it to return and be replaced by a similar disappearance of another item two shelves over, is going to become a semi permanent staple going forward… or at least until the opportunity has been well and truly exhausted.

This is aside from the rather obvious point that the reason why your local corner shop is out of your favorite bagels not because “supply chain issues” mean they can’t get them at all, but the fact that those issues mean their base cost of goods is higher than they sell them for by 2x and they simply can’t afford to stock them. That’s an entirely different argument… and a more obvious one, I assume has been happening the last year.

Just my random musing while out on a walk today, at least!

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J. 'Sargonas' Eckert



Sargonas ://: J. Eckert

Completely making it up as I go along

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