Desperate times call for desperate measures. The acute supply chain issues faced by US retailers has led three of the world’s largest companies to announce an unprecedented new supply chain initiative to enhance national security. The new relationship has been formed to not only share supply chain insight but includes the sharing of inventories for core categories that have been chronically in low supply since the beginning of the pandemic and are now deemed important to national security.
The announcement was made at close of trading Thursday. WMT (+3.2%), TGT (+4.5%) and KR (+3.9%) shares experienced significant increases in afterhours trading. Combined the retailers operate over 9,500 large format stores and supercenters.
Categories included in phase one of the agreement include health items, cleaning supplies, meats, produce, breads, soups and items for baking. Excluded from the agreement are vendor-managed items and private label items, clothing and household items.
“These items were deemed important components of food national security,” said April Stewart, Kroger Executive Vice President of Supply Chain. “During the initial stages of the pandemic the nation saw a four month of supply of key categories depleted in only 2 weeks. With rapid inflation in these categories and potential wheat shortages due to the war in Ukraine, the nation simply must ensure that these categories are not hoarded by a single retailer.”
Analyst reactions to the announcement were mixed. Said Greg Buzek, President of IHL Group, “While I understand the importance of these categories and find this new relationship interesting, who in their right minds did not include coffee in this list? Caffeine is absolutely crucial to national security.”
Added Dave Weinand of Incisiv, “And PEEPS, why aren’t PEEPS and chocolate included?”
Welcome to our annual April Fool’s Day post! So many crazy things going on we hope this brought a smile to your face. If not this post, perhaps the meme below.
Enjoy your Friday and enjoy the Final 4!