Supply Chain Delays May Cause Holiday Shopping Season to Begin Earlier
Sep 17, 2021
As we look to close out the 3rd quarter of 2021, it is clear the pandemic and many associated impacts such as hyper-demand and supply chain disruptions will continue to impact our industry and hamper our ability to synchronize supply with customer demand. We have all seen how global supply chain disruptions can impact a retailer’s ability to serve its customers on a “here and now” basis. We know that as we head into the all-important 4th quarter, disruptions such as shortages of raw materials, limited manufacturing capacity, longer lead times and then higher costs for distribution will continue to plague the world’s best supply chains. Our customers know this all too well as everyone that had a shopping experience in the last 18 months has seen fewer choices, product shortages, delays and inflation.
The Furniture, Appliance, and Consumer Electronics industries have been hit especially hard with massive disruption to very delicate global supply chains. Regardless of where the product is ultimately assembled, these industries are dependent on raw materials and components that are sourced from around the globe. All it takes is for a disruption of one raw material or one component and suddenly the industry is scrambling to locate alternative sources of materials in order to catch up with the demand. Today we are seeing COVID enter into 4th and 5th waves in Asia and impacting production and distribution of all things furniture. For example, China has partly closed the world’s third-busiest port after positive COVID cases from employees working in the port. The terminal shut down processes 25% of the cargo that passes through the Ningbo-Zhoushan port. With the shutdown of the Meidong Terminal, 40 container ships were backlogged off the coast of Ningbo and they are working on rerouting ships to Shanghai, which is already congested.1 In addition, we are also seeing a massive chip shortage fueled by demand from every sector including automobiles, TV’s, Computers, Appliances and the elusive latest generation game consoles.
Hopefully, you have prepared and your preparation included stocking your 4th quarter inventories earlier and with more than what you think you will need. In 2020, we saw an extended shopping season driven by a huge increase of 47% in online ecommerce sales. This increase in online activity is driving a longer “season” for shopping and, when combined with pent up demand and uncertainty in the supply chain, we can count on stock outages throughout the season. The concept of Black Friday as a single day of shopping is losing its place in retail as customers are now shopping for the entire quarter. We see many retailers starting earlier and earlier and this year will be no exception given the rise of online shopping and the threat of inventory shortages as the quarter moves on. The customer saw this last year and is sure not to repeat the same mistake of waiting for the best deal before buying for the holidays. The “hot” item or category this year will be something that can go home with customer or be delivered when they want rather than something that needs to be ordered.