Shops face supply crunch: Is Christmas in danger?

Saturday, 26 September 2020

​A cashflow crunch is coming for retailers trying to get stock on to shelves for Christmas.

The flow of imports to New Zealand has been disrupted in a number of areas in recent months, meaning empty shop shelves and long waits for customers, particularly those seeking whiteware and electronics. There are indications that the situation could continue for months to come.

The value of imports fell 16 per cent in August from the same time a year earlier. All main economic categories dropped and imports of consumer goods such as clothing and footwear were down $123 million.

Rod Duke, managing director of Briscoe Group, said shortages were an issue for shops. “If you try to buy a bread maker in this country at the moment it’s almost impossible and there are number of other products that are delayed.”

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He said the problem had been compounded because the year started with China delaying its New Year Holiday schedule, then Covid-19 had spread across the world, and shipping companies had taken their boats offline for maintenance, thinking they would not be so busy.

But routes in this part of the world had been extremely busy. “There’s a real problem getting container space.”

Retail NZ chief executive Greg Harford said the time it took to get freight into New Zealand had blown out by weeks, which meant that shops had to order product earlier to get a consistent flow of stock.

“My sense is that retailers have been working to get Christmas stock delivered early. The challenge is that it brings costs forward.”

They had to pay at the time the stock was ordered, and then wait for the opportunity to make the money back when they were eventually able to sell them on.

“It could be that there are some goods in short supply at Christmas.”

At Barrells 100% Extreme Appliances in Whāngarei, Connor Gray said there had been significant delays in sourcing appliances from manufacturers based in Asia. Fisher & Paykel and Panasonic had been particularly affected.

“With Chinese stuff, they had a massive lockdown so we did have a backlog.”

That was still an issue in some areas, he said. When the country first came out of lockdown, customers had been told they would face waits of up to three months for some appliances, he said.

Now, they were able to give customers a clearer idea of when stock would arrive.

Sue Chadwick, founder of the online Animal Kingdoms Toy Store, said that by the time New Zealand went into its first lockdown in March, it was clear there would be ongoing issues with supply.

“We diversified into new brands and new product ranges. We started looking at where our brands were, where were they based, what were their supply chains like, and we also started trying to buy early for Christmas,” she said.

“But to be honest, we are still seeing big delays and not the same product availability.”

Toy imports were down 9 per cent for the July quarter.

Auckland-based Chadwick said suppliers, retailers and customers were facing a lot of unknowns heading into the Christmas season.

Shipping times have increased, the time it was taking to have orders fulfilled was longer and not everything was available, Chadwick said.

Puzzles were a good example of the ongoing supply issues, she said.

“Since Covid, puzzles have skyrocketed in popularity. Everyone is stuck at home, everyone wants to do puzzles, so sometimes take months to get a new shipment in and what does come in is kind of drip-fed,” she said.

“The suppliers are saying, put in your orders and fingers crossed, hope for the best with what you are going to get in.”

Animal Kingdoms was a family business, so no one would lose their jobs if things got tough, Chadwick said.

“But we are kind of guessing what will happen and what each month will be like,” she said.

“We are going to have to prepare for anything. Just take it one day or one week at a time. We are doing the best we can and, if things go wrong, and if we have to close, we will know that we have done our best.”

Bridgette Sullivan-Taylor, a senior lecturer in strategy and international business at the University of Auckland, said the cost of air freight was very high so shipping was an alternative.

“However since some factories in China were shut (maybe still) they are behind on production/delivery.

“Further the shipping routes around the world have been disrupted with the constraints on movement. Ships have not so easily been able to port in say China to pick up or drop off goods and same coming into New Zealand. There are strict requirements to do with quarantine and ships have been turned away with all the produce aboard if there are sick crew on board.

“This was seen recently with the issue of the private boats wanting to have safe harbour here during cyclone season. Our borders won’t be jeopardised by the Government at either the airports or ports [due to] Covid concerns. So as long as these constraints are in place in New Zealand and elsewhere the movement of people and goods will be limited.”

Duke said it was unlikely that people would be unable to get Christmas presents for friends and family. “People may not be able to have the full choice of products they would normally expect but there will be products around.”

Shopping early

Christmas is Elizabeth Abbot’s favourite time of year. But this year, she has changed her normal shopping habits to accommodate the uncertainty of the coming months.

“I have almost finished my Christmas shopping,” Abbot said.

“Usually I would buy odd bits and pieces throughout the year but this year I wanted to complete my shopping early just in case Covid hits again, and we go into lockdown.”

Most of Abbot’s shopping was done online.

“I will miss the whole mall experience over Christmas with the cheesy Christmas music playing but I would like to avoid the crowds due to Covid,” she said.