US Christmas retail crush comes early as supply chains buckle

[Rob Thompson]

US Christmas retail crush comes early as supply chains buckle

Source - Finacial Times

By Obay Menyeti

Date 110-10-2021

Steve Denton has finished his holiday shopping. The chief executive of Ware2Go, a UPS-backed company whose technology helps merchants find warehouse space, always browses for presents ahead of time, but his inside view of retail supply chains has given him more reason to finish early this year.

 

Resurgent consumer demand is feeding hopes of a far stronger season for US retailers in 2021 after Covid-19 disrupted factories, scrambled distribution networks and kept wary shoppers at home last year. Deloitte expects holiday sales to jump 7 per cent to 9 per cent above the 2020 level, to $1.3tn.

Yet that demand is further straining supply chains, leaving both merchants and customers concerned they might not secure the products they want. That means that this second pandemic holiday is starting far before Black Friday, the late-November date on which the Christmas crush traditionally begins.

Many large retailers, braced for port congestion and shortages of truck drivers and warehouse space, imported merchandise “way ahead of time” this year, noted Sean Whitehouse, supply chain lead for Accenture.

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    Even so, “there will definitely be weeping children this holiday season”, said Joel Bines, co-head of AlixPartners’ retail consulting practice, predicting that shelves would not be empty but stores would struggle to secure the most in-demand items.

The early imports have created other challenges, however, in the form of ballooning inventories and higher costs, both for securing enough goods in time and for tempting consumers to take them off the shelves.

“Many of them have brought in inventory early, [so] they want to get that out,” Whitehouse said. That means they have an incentive to encourage consumers to shop earlier, to free up capital and make space for fresh deliveries.
Lowe’s made “a very strategic decision” to bring in products earlier this year, David Denton, its chief financial officer, told investors last month, indicating that the choice was paying off. After a fast start to Halloween, Christmas purchases were also “coming in earlier than we originally planned”, he said.

Harmit Singh, chief financial officer of Levi Strauss, similarly told the Financial Times that its holiday sales had already started, boosting its expectations of a strong but unusually extended season.

To prompt shoppers to buy early, however, retailers are offering deals and discounts well before they usually make their annual promotional pushes. “It’s very hard to move consumers off . . . their traditional timelines,” noted Thomas O’Connor, senior research director in Gartner’s supply chain practice.

Amazon declared last week that “the holidays have officially begun”, announcing that it was releasing “Black Friday-worthy” deals almost eight weeks before Black Friday and 11 days earlier than it started its promotions in 2020.

Retailers such as Target, which announced that its “deal days” would start on October 10, were responding to the “pacesetter”, Amazon, said O’Connor. Other brands had learned the benefits of an early peak season from China’s Singles Day, a promotional event in early November, he said.

The traditional Black Friday shopping peak had been so high that many retailers had “struggled to recover” for December, he observed, and now saw a longer season as a way of “shaping” demand to be more manageable.
 

 

[Rob Thompson]

It would appear this is a world wide issue, or is it media hype again  

[Santa Craig Maxwell]

1 hour ago, Rob Thompson said:

It would appear this is a world wide issue, or is it media hype again  

Some of both, I suspect

[Black Hills Santa]

Looking for the party responsible for fixing this mess

[Santa Castor]

I think it would be an excellent idea to come up with an updated backstory about shortages at the North Pole to give the parents an "out".  While we never promise anything, this year, even while getting the "parent nod", I will be extra careful that the children do not come away with an expectation.   The parent may feel they the particular toy will be no problem to acquire, historically only the "hottest" toys have been, this year may be unlike any other.