With supply chain woes, Fargo area retailers suggest shopping early and local for Christmas
Surveys show that Americans are ready to spend more cash this holiday season, but pandemic-caused woes that stretch from southeast Asian factories to American stores have local shopkeepers scrambling to lay in stock for the annual shop-a-thon.
FARGO — Nancy Frid is trying to be philosophical about her Christmas stock. She's aiming for Zen.
The co-owner of Vintage Point doesn't want to freak out about having stock stuck out there in the Great Somewhere, and not in the store.
The cozy south Fargo shop, like every other retailer big and small, is bound to the caprice of a complex and gummed-up supply chain.
Pre-Christmas shipping schedules have been trashed, thanks to the effects of the continuing COVID-19 pandemic.
“We’re placing our orders like life is wonderful, and there’s no telling. Some things are delayed, some things aren’t. Some things are shipped right away, some things aren’t. We're just kind of going with the flow,” Frid said in early October. “Everyone is feeling it.”
For Frid and Vintage Point’s other co-owner, Deb Wallis, it’s down to hope and luck.
“Right this very minute… you don’t know if something’s in a container off the San Francisco harbor, or stuck in customs, or where it’s at,” Frid said. “Vintage Point is just going with it. If we get a shipment, we’re happy.”
- Nosh Kitchen is bringing its sweet and savory offerings to downtown Fargo
Fargo's Twin Peaks lives up to reputation for cold beer, comfort food and 'scenic views'
Drekker Brewing's meeting its 'Skol' goals as steel goes up for $20 million Brewhalla addition
F-M entrepreneurs are taking passion projects and turning them into paying side hustles
Before the pandemic, if an order was slow in arriving, she would be on the phone. Now?
“The pandemic has taught patience,” Frid said. “There’s nothing you can do about it.”
Legacy Toys at the West Acres mall saw the opening of its new location delayed thanks to shipping snarls for store fixtures and other goods, company COO Peter Cpin said.
“We were supposed to open in August. That just gives you an idea of just how far behind all that stuff is,” Cpin said earlier this month.
Shipping bottlenecks have meant running low on some stock, while shipping costs have risen considerably.
Cpin counsels shopping early.
“It’s really a smart idea to get out ahead of everyone else," he said. "Don’t wait for Black Friday."
“I think that’s the echo for everybody. We will have something for everyone. It just may not be exactly what you want. You may want a Barbie. It may be a Barbie backpack,” Cpin said. “Once it’s out, it’s out. Once we’re out of something, the chance of getting it back within the season, it’s going to be pretty hard, unless it’s a regional item.”
Strong sales expected
In a survey released in August, KPMG said retailers expect strong sales this year. Sales are expected to climb 7%, compared with the historical norm of 3% to 4%.
At the same time, 82% of executives surveyed by KPMG said they were either “somewhat" or “very concerned” about stock shortages or inventory issues.
In September, KPMG reported optimism in a survey of consumers. Respondents estimated their holiday shopping budgets would increase 5% this year. However, about 61% planned to start shopping in October, and 54% were concerned about lack of stock and shipping delays.
Disruptions to supply chains have been regular events since the pandemic roared into prominence in the U.S. in early 2020. But the emergence of the highly infectious delta variant of COVID-19 has wreaked havoc worldwide, forcing factories throughout Southeast Asia and China to close at times for lack of raw materials, energy or manpower.
Despite that, manufacturers tried to meet the rising demand from the U.S.
Consequently, there are scores of container ships waiting off the California ports of Los Angeles and Long Beach to unload cargo. The head of the Port of Los Angeles recently told CNN that there are perhaps 200,000 containers waiting to be unloaded.
President Joe Biden has ordered 24/7 operations for those ports to clear that backlog, but that won’t work smoothly until enough drivers are found to move offloaded containers away from the ports at all hours.
More than a holiday headache
The effects of the supply chain snarl are profound for U.S. consumers, holidays or not:
- China, Japan, South Korea and Taiwan together have become the "Big 4" semiconductor players in the Asia Pacific region, with China the leading producer of semiconductors in the world. Semiconductors help run everything from smart toasters to smartphones, gaming consoles, tablets, laptop and desktop computers and vehicles of all kinds.
- About 85% of toys sold in America are made in China, the Toy Association reports.
- About 80% of Christmas decorations are made in China. And about 80% of artificial Christmas trees are made in China. The American Christmas Tree Association predicts there will be a shortage of both artificial trees and decor.
- China was the world’s leading producer of footwear in 2019, with about 13.5 billion pairs of shoes produced. China, India, Vietnam and Indonesia are leaders in footwear production, accounting for 75% of footwear production worldwide in 2019, Statista reports.
- China accounted for more than half of global garment production in 2021. Bangladesh, India, Vietnam, Ethiopia, Indonesia, Sri Lanka and the Philippines are often seen on clothing country of origin tags, too.
‘There’s a ripple effect’
Vinod Lall is professor of operations and supply chain management at Minnesota State University Moorhead’s Paseka School of Business.
Lall says past supply chain disruptions due to natural disasters have mostly affected supply. This time, not only is supply affected, but demand has jumped, and the transportation sector can’t keep pace.
Lall predicts demand will drive up prices 4% to 4.5% in this quarter, and the supply chain will be hobbled at least into 2022.
“On transportation, I think there’s a ripple effect. We are running out of containers, running out of ships, it’s difficult to find truckers, railroads are getting clogged,” he said.
Containers now come at a premium, Lall said. For example, a typical shipping container holds perhaps 35,000 books. Before the supply chain issues ramped up, it cost about $2,500 to move a container. Now it’s about $25,000.
“Now you’re basically paying what you’d pay for air freight,” Lall said. For some companies, that may be the short-term solution for shipping their goods.
Truckers are exhausted and parts are harder to find for trucks that break down, Lall said.
The trucking industry is short 80,000 drivers, Chris Spear, president and CEO of the American Trucking Associations, told CNN.
Some firms will be rethinking “just-in-time” delivery models and create demand for warehousing space, with firms opting to carry more inventory, Lall said.
Sourcing will also be questioned.
“Does getting things all the way from China make sense?” Lall asks. Or, is it better to bring some manufacturing back to the U.S.?
Transportation also must be addressed, he said, particularly in modernizing port and rail operations.
Some of the biggest retailers, such as Target and Walmart, have taken steps to sidestep the logjam at ports, and depending on how “vertically integrated” they are, might pull it off, Lall said.
In early October, Walmart announced it had chartered ships and was diverting shipments to less-congested ports. The corporation also rerouted shipments within the U.S. to avoid rail delays, hired 3,000 more truck drivers and planned to hire 20,000 permanent supply chain positions.
Minneapolis-based Target announced that it was hiring another 30,000 people for its warehouse and distribution network, for the holiday season and beyond. Target also planned to increase night pickups of containers from ports.
Keep it local
Sally Loeffler, co-owner of downtown Fargo’s Beyond Running and Outermost Layer, says she’s worked to lay in extra stock, despite factory closures and transportation ills.
“We’ve been able to secure products ahead of time. People can still find what they need,” Loeffler said.
Companies have told her some products won’t launch this year, or won’t arrive by a certain date. That has meant finding alternative sources for goods.
“The expectation that everything will be readily available to you at the last minute is unrealistic this Christmas. You’ll just have to decide what’s best for you and what’s important for you to have. There should be an expectation on the consumer’s point that there will be shortages of product or some narrowing of choice when it comes to the holidays," Loeffler said.
She also encourages shoppers to shop locally.
“You know that we have the products. What you see is what you get. … Definitely shopping online from out of state from non-local entities is more of a risk this year. We just encourage people to keep it local and help businesses where we are,” Loeffler said.
Half a block to the south, Greg Danz, owner of Zandbroz Variety, is also mulling the Christmas crush.
Books make up the biggest slice of sales for Zandbroz, and that department is in good shape, he said. Toys, however, have been depleted.
“Two of our toy vendors, who we have worked with for decades, are just having a really hard time getting any inventory and getting it moving,” Danz said Monday, Oct. 18.
Stock on games and giftable items such as toiletries and fancy pens is good, he said.
“Ninety percent of the books are out there and available. Some of the newer books, the printing or the release dates are getting pushed back” and reprints are slow to arrive, Danz said.
“There are some days worse than others. My biggest aggravation is that you can’t talk to anybody anywhere. No one answers the phone anymore. There are still parts of the country where people aren’t in the offices, so you’re having to email and hope they see your email, " Danz said. "There’s not a lot you can do. You don’t have any choice. You try to not let it make you crazy."
But business has been good this summer and fall, and he counts on it continuing — though he hopes the shippers can deliver something to make his season merrier.
“It is what it is,” Danz said.