This week's McCurry's Ideas Exchange Newsletter takes a look at how the Japanese earthquake may affect not only supply but your ability to re buy stock. It certainly makes for interesting reading and, as always, proves what a great resource the McCurry Idea Exchange newsletter is. If you are not a member you should sign up today!
Since Friday we've been following the news from Japan with growing concern, not only for the humanity involved but with a strong sense that our photo/imaging industry will be impacted more severely than initially expected.
We aren't trying to be the latest news on the tragedy - BBC, CNN, etc., are a better source for that than we are. Our goal is to give you information to improve your success in the imaging world.
Indeed, there has been a run on some products as we suggested in Sunday's special edition. One memory supplier that shows "in" or "out" of stock on their order page had 45% of their SKU's as "out" at close of business Wednesday. That compares to between zero and three for 2011 to date.
There are sales reps calling on dealers (yes, they do exist - in person and on the phone) that encouraged retailers to load in merchandise to insure they had product. We've heard they had to be "re-educated" that statements like that were only to be made by corporate headquarters and right now Big Corporate had no official policy . . . . What we don't know is if the reps calling on big box stores were told the same thing.
With one exception, every retailer Bill talked to said they were loading in some critical SKU's for their business. That retailer said they were going to not care if they ran out of a major brand DSLR. The retailer's logic was he hated the brand because of no margin and mistreatment of smaller retailers. While his emotion may be based in fact, the reality is customers who come into stores want to see and touch product. If you don't have what they want to buy, it's much harder to convince the customer to buy what you do have. Try to make your decisions based on your customer and their perception, not your own biases.
Mike Worswick, one of the brightest minds in the room, raised yet another concern, that of replacement cost. He suggested there will be yet another squeeze on retailers, the requirement to re-buy at higher prices. Where will the working capital come from to boost inventory procurement? Mike's wise suggestion was that retailers carefully watch the market around them and take pre-emptive price increases where and when they can. Spot memory prices rose 15%-25% since the tragedy struck. Should you be raising your price now so you can have the dollars on hand to pay for the replacement inventory? More than the direct impact of several production facilities being damaged or destroyed, there are deeper underlying problems:
Camera manufacturers, like automobile manufacturers, have come to depend upon a long chain of parts manufacturers. Some key parts come from just one "cottage industry" manufacturer, and the lack of that one key part could hold up production at an entire plant. An obvious example is Sony's production of image sensors that are used in many brands of digital camera.
Returning to the automotive analogy, here's part of a report from MSN Auto:
. . . two Japanese automakers are already halting some production at North American factories to assess availability of parts following Friday's deadline earthquake and tsunami in Japan.
Subaru of America has suspended production at its plant in Lafayette, Ind. The plant, Subaru's only North American factory, employs 3,500 workers and built 150,000 vehicles last year, including the Outback and Tribeca wagons and Legacy sedan. A company spokesman doesn't know when production will resume.
Toyota is suspending overtime and production on Saturdays at all of its North American plants to assess the availability of car parts. Toyota is trying to conserve parts after the huge earthquake and tsunami, which is disrupting shipments from Japan to the U.S.
read rest of that story
Chris' prediction: In a few weeks we will start seeing the biggest shortages in hard goods of the century so far, and it will get worse before it gets better. As Bill stated in the special edition #384 "Doing nothing is a risk. Loading in inventory is a risk. Every well capitalized retailer that called is taking the long risk, they are loading in some of those SKU's they see as important to their market. It's not widespread helter-skelter ordering. These retailers are targeting the few products they feel they can't be without. The categories run from memory cards to filters to DSLR to big glass. Interesting most retailers aren't overly worried about point and shoot cameras. The common belief is that point and shoots aren't made in Japan. While Japan may technically not be the 'country of origin' it is possible these point and shoots have some Japanese components that may not be readily available. Those retailers I talked to felt there was more ability to sell an alternative in the point and shoot category than the DSLR category."
It appears that the lab side of the equation won't be as hard hit. Noritsu issued a statement "Fortunately NK Works is separated from the epicenter by a distance of approximately 1,000 kilometers, so there was absolutely no damage to the facilities, and all Noritsu employees were well out of harm's way. We have been investigating the affect of this disaster, and with our infrastructure in tact, will continue the production and distribution of our high quality products and parts."
