NerdWallet: The supply chain outlook for holiday shopping: What’s in stock, and what’s not
Logistics in general, and supply chains in particular, weren’t something Black Friday shoppers thought about much. Until the pandemic hit and empty shelves were where baby formula, produce and, yes, toilet paper once stood.
Are we past shipping bottlenecks, clogged ports of entry and long-haul trucking issues? How will supply chains and inventory levels impact Black Friday bargains?
There is good news.
Black Friday is here now
It probably comes as no surprise that Black Friday has become something of a misnomer. Retailers have already launched pre-holiday discounts, and the National Retail Federation’s latest consumer survey shows that 38% of consumers plan to start shopping for the winter holidays earlier this year than they typically do.
And 45% of the 2,000 consumers surveyed by NRF and Prosper Insights & Analytics in September said they intend to shop in stores this Black Friday.
But wait. Aren’t we still living under the bind of supply-chain issues? We’ve seen the video of ships clogging major ports, loaded with containers going nowhere.
“In addition to seeking alternate ports, using air freight and looking for alternate suppliers, many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues,” Jonathan Gold, vice president of supply chain and customs policy for the NRF, said by email.
“You don’t have a hundred ships sitting out in the harbor outside the ports of LA and Long Beach right now, so that has improved,” says John Haber, chief strategy officer for Transportation Insight, a logistics management company.
The products in ample supply
The retail industry reports well-stocked warehouses, and the discounts have begun.
“Retailers have taken a number of steps to ensure they are prepared for increased consumer demand and have the necessary inventory in stock for the start of the season,” Gold said.
Haber says his company serves almost 15,000 customers, many of them retail, and “most of them have too much inventory — and some of them have way too much inventory.” Some products are still sitting in containers, not due to a transportation problem but to a lack of room in distribution centers, he adds.
The overstocked issue stems from retailers ordering too much inventory following the empty shelves that plagued profits last year, Haber says. “So companies went overboard in bringing in a ton of inventory much earlier this year prior to peak season.”
And then, inflation hit, and consumer demand dropped rapidly.
What product categories are seeing the deepest inventory? Clothing, electronics and toys appear to be in good supply.
told the NRF that over half of its holiday stock would be new items — the most in recent history. Nike
has announced “aggressive markdowns” to clear its backlog of inventory.
has already announced discounts on toys, appliances and electronics. Meanwhile, Walmart
has tipped that toys, electronics, home decor and beauty products will be in the bargain bin. It has increased in-stock inventory on the items expected to sell best, including TVs, tablets, furniture, wireless headphones and robotic vacuums.
With the housing industry in decline as mortgage rates rise, shoppers may also find deals on major appliances — items that were often in short supply during the pandemic.
Are there lingering shortages?
While essentials such as baby formula and some grocery items may still be in short supply, the gift-giving season seems well stocked. Nearly 90% of 100 retail executives surveyed in August by accounting firm KPMG expect minimal or no shortages during the holidays.
However, “anything that requires a chip” may be scarce, Haber says. So many products have semiconductor chips in them these days, including consumer electronics such as gaming devices, televisions, computers of all sizes — and smartphones. If such items are on your shopping list, you may want to buy when you see a decent deal and know the retailer’s return or price-matching policy should you find a better price later.
What could go wrong?
There are several possible setbacks that could impact last-minute deliveries of retail stock.
workers in Illinois recently staged a walkout during the second Amazon Prime sale of the year. More than 20,000 union workers who build and maintain railroad tracks have rejected a labor agreement, once again triggering fears of a rail strike. And pilots for FedEx
are seeking a federal mediation process involving pension benefits.
Add in possible weather delays and you can see just how vulnerable the supply chain can be. Your best option may be to do Black Friday shopping early and take advantage of all that inventory already on the shelves.
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Hal M. Bundrick, CFP® writes for NerdWallet. Email: email@example.com. Twitter: @halmbundrick.