Omicron compounds worker shortage, supply chain woes for retailers

Slashing store hours, temporarily shuttering locations and sending apology letters to customers for long lines and delayed appointments.

These are the some of the unusual steps that retailers and restaurants are taking as Covid cases spike across the country, fueled by the fast-spreading omicron variant.

Companies are no longer worried about state and local governments shutting businesses down.

Instead, the businesses are coping with a shortage of workers as people call out sick, get exposed to the virus or scramble to find childcare. And the threat of more supply chain woes looms as the highly contagious variant spread across the globe.

“There is no question that staffing is definitely a big issue this time around,” said Stephanie Martz, the chief administrative officer and general counsel of the National Retail Federation. “It was maybe less measurable when we were at a point in the pandemic when so much was closed and everything was so scaled down.”

“I don’t know if I would go as far as to say that we have an unprecedented number not being able to work, but it’s high,” she said. “It’s really high.”

Covid cases have surged. The U.S. is reporting a seven-day average of about 600,000 daily new cases, an all-time high and up 72% from the week prior, according to a CNBC analysis of data compiled by Johns Hopkins University through Thursday.

A soaring number of sick, exposed or overworked employees has caused retailers and restaurants to take unusual steps as their existing labor problems worsen. Macy’s cut store hours at locations across the country for the rest of this month. Walmart temporarily closed nearly 60 stores in December in coronavirus hot spots. And other employers, including Starbucks, Chipotle and Nike have been forced to close some of their doors as they simply don’t have enough people to keep them open.

Walgreens sent an apology email to customers this week, acknowledging customer complaints about long checkout lines, out-of-stock items and delays for Covid vaccine or test appointments. In the note, the company’s leaders mentioned the many tasks that pharmacy staff are juggling — namely, giving over 55 million Covid vaccines and more than 23 million Covid tests, while still filling over a billion prescriptions annually.

“There’s been a high level of stress in the system,” Walgreens Chief Financial Officer James Kehoe said Thursday on a company earnings call. He said the company is going to spend roughly $120 million more on labor to help its stretched-thin staff.