As we ring in the 2021 holiday season, hopefully many of us are not as consumed with financial worry as in recent years. Things are gradually getting better—with one caveat: thanks to a global supply chain crisis and shipping container problems, toys and other retail inventory shortages are expected to disrupt retailers.
Last year, families on the brink of lockdowns and stay-at-home orders purchased toys and games to keep their kids entertained, which also created shortages. This year, the supply chain problem and reduced shipping options are leading to less inventory and/or increased pricing.
Shipping delays are also affecting the availability of other consumer goods—clothing, food, electronics, furniture, you name it. What’s more, this comes on the heels of an ongoing semiconductor chip shortage, which may make it harder to get video game consoles and TVs for the holidays.
What’s being done about it?
- Several shippers and retailers announced that they are taking steps to move toward 24/7 operations.
- Major shipping ports have stepped up their game with additional ships.
- Many stores will rely on different modes of fulfillment to customers, such as buying online; pick-ups in store/curbside; and shipping from store and buying in store, with home delivery.
- Extended store hours and backup stock, in case demand increases unexpectedly. Some of the big box retailers and shippers—like Walmart, UPS, FedEx, Samsung and Home Depot—will increase nighttime hours or change hours to 24/7. To address the shipping container clog on the west coast, FedEx will increase its nighttime hours and make changes to trucking and rail use; Samsung will operate 24/7 to move almost 60% more containers out of the Los Angeles and Long Beach ports; Home Depot and Target will move up to 10% more containers out of these ports in their off-hours each week.
- Executives at Hasbro and Mattel, two of the three largest toymakers in the world along with Lego, told analysts in late July that their companies have secured enough shipping containers to keep up with demand this holiday season, even though they’ll have to raise prices to compensate for higher shipping costs. Consumers can expect price increases of 5% to 10%.
A recent survey by KPMG cited that 82% of executives in retail stores are concerned about inventory shortages this year. This comes with warnings to parents that prices are likely to go up due to these factors. It is costing companies more to produce and ship their products to stores and the only way to recover those costs is to raise prices.
Shipping container companies have dramatically increased their prices from $3,200 to $22,000, something some toy industry insiders are frowning upon, citing these companies are taking advantage of the situation. This has resulted in several large retailers chartering their own vessels to bypass these costs.
What can you do?
To help navigate this crisis, here’s some great advice from Moms.com:
- Shop earlier and often. If you’re the type to put off shopping until Black Friday or even December, you might want to start earlier than normal to avoid a holiday letdown for your little ones or the rest of the family—clothing and electronics may be scarce as well. Keep in mind that prices will likely go up for those in-demand items because of their scarcity, along with inflation.
- Budget. A good budget can save the holiday season. Start early (like now) and stick to it. An excel spreadsheet can work wonders for keeping track of expenses, or use Tower’s free Money Management tool.
- Perseverance is key if it’s an important gift. But if you think you’re going to start shopping mid-December, you may be out of luck.
- Have conversations about realistic lists with youngsters. One Tower member recalls her 10-year old son’s wish list, which read: “Dear Santa, I have been a good boy this year. I don’t want much for Christmas except: an ATV, a remote control truck, a dirt bike, Nintendo and maybe some Rescue Heroes and a Spider-Man toy that shoots webs.” We’re guessing the Spider-Man toy and Rescue Heroes won the day. Manage expectations as best you can!
- Think outside the box on how to make it all work and stick to your budget. If you don’t have one, there are many Tower resources to help. You can also take advantage of Tower’s special Holiday Loan for a little extra cash.
- “If you see it, buy it.” Avoid shopping around for the best deals at five different stores to save a few bucks. It will be one item off your checklist, plus time saved.
- Use retail rewards for extra savings. Have a favorite store that you have a loyalty account with? Check them out first. And if you’re paying with a credit card, be sure to use one that gives you rewards or cash back on purchases. Why not enjoy cash back on things you’re already planning to buy?
- Look out for special promotions from your favorite retailers.
- Don’t forget about the bigger rewards programs like Rakuten (formerly Ebates), Swagbucks and many more.
Despite toy shortages and other supply chain concerns, holiday sales forecasts are more optimistic than expected. Just keep a few tips in mind, start early, and most of all enjoy the season!
Resources: CNN, Today, MSN.com, NBC Boston.com, Bestlife.com, Moms.com, WCPO 9 News