Will retailers get Elves on the Shelves this year?
There was many a double take over the last few days in supermarkets across the country as we started to see the seasonal mountains of tins of Christmas sweets on sale. Even noted brand Quality Street got in on the act where you can choose your own chocolates. Cue the usual grumblings of ‘’can they not even let us get Halloween over with?’’
The thoughts of presents and turkey is a little far off in our minds, the retail sector is gearing itself up for what promises to be one of the toughest Christmas periods it has faced in a very long time. Us consumers have become giddy using the web to shop, will we ever be bothered making the effort to return to retail shopping as it used to be?
Undoubtedly, supply issues in the UK’s food sector have generated a lot of concern and column inches in the past few months. One British retailer is resigned to the fact many of the galaxy of goodies that are seen on their Christmas ads and lavish brochures will not land in Ireland due to supply chain issues. Many pro-EU voices here in Ireland and beyond pointed out that there will be a shortage of turkeys on tables at Christmas this year.
Brexit is certainly a contributing factor, but the issues for retailers this year run much deeper. Commodity inflation, high shipping costs, problems sourcing shipping containers, a lack of HGV and delivery drivers and reduced factory capacity in China are going to affect all of us in the EU this Christmas.
The impact of the pandemic on factory output in China, combined with huge backlogs created by the blockage of the Suez Canal earlier this year, mean that it is proving incredibly difficult for distributors and retailers to get stock for the busy Christmas season. They are having to make compromises, including settling for stock that isn’t their first choice, paying higher costs or reducing the range of products on offer.
Additional Covid-19 precautions and safety measures at Chinese airports have also added to the cost of air freight, but many companies have had to charter air freighters to get some products from China, which is obviously a huge extra cost that is unsustainable in the long term.
Toys have been one of the hardest hit product lines, along with bicycles and large homeware items. Consumer electronics, where shipping costs are a smaller percentage of the overall cost, are less affected but have been hit by a serious shortage semiconductor chips.
Once the products are getting to Europe and the UK, there is then the additional problem of a shortage of drivers. In the UK alone, there is an estimated shortfall of 90,000-100,000 drivers.
There are bottlenecks everywhere to contend with, from the factory floor to the last mile of delivery. All this is even before we get to the issue of consumer demand, and what that will look like after almost two years of the pandemic. As countries begin to loosen social restrictions and people feel more comfortable about going out, will they prioritise spending on restaurants, bars, events, concerts and nightclubs over buying presents and gifts?
The acid test will be the great Black Friday sales, if they happen at all. Many retailers are extremely fearful of ramping up promotional activity and are now thinking twice about doing so, as they are fearful of stock supply issues.