We're again being told to “get going now” on our holiday shopping this year. Wait too long, retailers warn, and you might not find everything on your gift-giving list.

While stores have plenty of merchandise now, retail experts contacted by Checkbook agreed: Global supply chain problems resulting from the pandemic are likely to create inventory shortages before Thanksgiving.

Listen to audio highlights of the story below:

“The supply chain disruptions are real, and there will be shortages that impact the holiday giving season,” said Jeffrey Shulman, a marketing professor at the University of Washington’s Foster School of Business. “With disruptions in production and in transportation/logistics, a broad range of products will be affected.”

Simply put, the pandemic disrupted manufacturing and delivery systems and they can’t keep up with increased demand from American consumers. Production delays are being caused by material shortages and lack of workers.

Shipping all these goods across the ocean and into stores is another logistical nightmare. Ships are waiting for weeks to unload at ports on both coasts. Even after the containers are offloaded, there aren’t enough trucks or truckers to deliver all the goods.

Products made in Asia—toys, clothing, video game systems, as well as some brands of headsets, TVs, and kitchen appliances—are most likely to be affected.

Marshal Cohen, chief retail analyst with the NPD Group, predicts “a shortage of some hot products before Christmas” with no way for retailers to restock their shelves.

“This is causing retailers to panic, and it's now starting to cause consumers to get concerned that they might not get all of their gifts,” Cohen told Checkbook. “Because of the limited supply, you may not be able to get the exact model you want, the exact style you want, or the exact color you want.”

Wait too long, and you might even find it hard to get an artificial tree to put your presents under. Most artificial trees come from China. Buy before Thanksgiving or the shelves may be bare, Chris Butler, CEO of the National Tree Company, told NBC News.

How Retailers Are Responding

Retailers remain hopeful about the upcoming holiday season, but most worry about supply-chain bottlenecks.

A survey of more than 100 retail executives by consulting group KPMG found that 43 percent were somewhat concerned, and 39 percent were very concerned, about inventory issues.

The global supply chain “has been stretched from end-to-end,” and it’s impacting retailers of “all sizes and distribution channels,” according to Jonathan Gold, vice president for supply chain at the National Retail Federation.

Right now, most retailers—online and brick-and-mortar—are “doing very well” with their inventory, Gold told Checkbook. “But there’s a lot of pressure on supply-chain executives to make sure the products are here.”

Hoping to relieve that pressure, Walmart, Target, Home Depot, and Costco have chartered ships—at a cost of $1 to $2 million per month each, according to MarketWatch. “As co-managers of the ship, we can avoid delays from additional stops and steer clear of particularly backed-up ports,” Target explained in a blog post last month.

Major ports on the east and west coasts are experiencing unprecedented delays in getting ships docked and unloaded. In recent weeks, there’s been a constant backup at the Port of Los Angeles, the nation’s busiest container port, with dozens of ships anchored off the California coast waiting to dock. Even when cargo is unloaded, there aren’t enough rail cars or trucks to get those containers to their final destinations.

Higher costs for materials, manufacturing, and transport have also been driving up retail prices for months, with no end in sight.

Just look at what it costs to ship a single cargo container to the U.S. from China: The pre-pandemic price was about $3,000; now it’s around $25,000, according to The Toy Association.

In its Holiday Insights report, Salesforce predicted consumers will pay 20 percent more for their holiday gifts, as retailers and manufacturers face paying an additional $223 billion for the cost of goods.

Must-Have Toys Are Going to Be Problem

About 85 percent of the toys sold in America are imported. Most are made in China, but toy companies moved some of their production to Vietnam, which has been especially hard hit by COVID. Getting those toys from there to here is the ongoing challenge for retailers.

“We're seeing a lot of empty spots on shelves, not vastly empty shelves, but some weakness,” said Steve Pasierb, president and CEO of The Toy Association. “So, there’s a lot of risk and worry out there.”

The biggest problem facing shoppers, he told Checkbook, will be a lack of selection and variety.

“Not that there aren't going to be toys, but the normal wide selection, multiple colors, options that you might have normally seen are really at risk for this year,” Pasierb said. “And if it’s sold out, don’t count on it by Christmas. It may come in January or February.”

At Mischief Toys in St. Paul, Minn., co-owner Dan Marshall saw this coming, so he started ordering months earlier than normal. Except for a few problems getting some books and wrapping paper (because of the global paper shortage), Marshall feels well prepared for the holiday season. But if a toy sells out, it won’t be easy to reorder.

“Everyone's going to have a hard time doing that this year,” he said. “So, don't expect to be able to find any kind of hot toy very easily.”

If you can’t find what you want at one of the big chain stores, check with a local toy store. They may have what you’re looking for, Marshall told Checkbook.

How to Be a Smart Shopper This Year

Clearly, things are a mess for retailers. But that doesn’t mean you need to make a mad dash to the store and buy whatever you can find. This isn’t like the toilet paper shortage!

“Go online and check the current availability for items you may want to buy for Christmas or Hanukkah. If they’re not in stock now, their availability may not improve when demand really picks up,” said Edgar Dworsky, founder and editor of ConsumerWorld.org. “Watch the circulars for available deals. My sense is that stores are not going to advertise items they don’t have in stock and don’t think they’ll actually receive.”

With consumer demand up and a broken supply chain, if you wait too long, you might not be able to find specific things on holiday shopping your list.

“Of course, buying early means you may miss out Black Friday or Cyber Monday sale prices, but see if the store or your credit card has a price guarantee policy,” Dworsky advised.

To convince shoppers they can “buy now” with confidence, Target recently revised its holiday price match guarantee. As of Oct. 10, customers will be able to request a price adjustment for any items they buy in store or online, if Target lowers the price before Dec. 24.

One more prediction: There’s a good chance you’ll see fewer promotions this holiday season.

You won’t see stores advertising “everything on sale.” You'll see categories that are going to go on sale as retailers trying to manage their inventory levels,” the NDP Group’s Cohen told Checkbook. “If they're low on inventory, no need to promote it. They’re going to be very selective in what products get put on sale this year.”

Black Friday and Cyber Monday will still be a major shopping events, but not as “aggressive” as in years past, Cohen predicted.

“If you’re not brand specific or model specific, you’re going to find deals on other products that are similar,” Cohen said. “So, if you do have to be married to a very specific product, take advantage of being able to trade over and get even better deals.”

Final tip: The savvy shopper should have a backup plan: If I can’t get this, I’ll go with that. If the retail giants don’t have what you want, visit some small stores in your area. As always, a gift card is a default option.

 




Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He is also the consumer reporter for KOMO radio in Seattle. You can also find him on Facebook, Twitter, and at ConsumerMan.com.