Date: Monday, December 14, 2020
Source: Wall Street Journal
And then, there weren’t enough lights for the tree.
Holiday décor is selling out faster than usual in many stores with two weeks left before Christmas, as Americans fill dark, increasingly cold pandemic days by buying up more lights, trees and ornaments at a rapid pace.
Walmart Inc., WMT -0.49% Costco Wholesale Corp. COST -0.34% , At Home Group Inc. HOME +1.51% and other retailers known for selling holiday items didn’t anticipate the pandemic-fueled surge when buying most products for the season nearly a year ago, say executives and people familiar with the situation. In some cases, executives made purchase decisions just as coronavirus-related restrictions took hold and trimmed orders.
The imbalance, which has left some locations with bare shelves, is a stark example of how the pandemic has disrupted retail strategies and strained supply chains during the critical shopping season.
Retailers generally can’t augment supplies for holiday items at the last minute. Artificial trees, string lights and other seasonal products are often made nearly a year in advance in Chinese factories that need to plan production schedules and allow time to ship goods globally, retail executives say.
At Home Group in the spring cut its holiday-related orders by about 15% compared with last year, said Lee Bird, chief executive of the home-decor chain with more than 200 big-box stores. At the time, all its stores were closed because of pandemic lockdowns. A few weeks later, based on signs of a surge in home-goods sales, the retailer upped its order by about 10%, which was still lower than last year, he said. “It was such a dire outlook, we ended up shrinking our buy for holiday,” he said.
Overall that has helped profits at the chain, Mr. Bird said, because it won’t need to discount products as it did last year and sales have skyrocketed since its stores reopened.
“If I could do life over again, I’d change some things, and one would be buying more for this season,” Mr. Bird said.
At Walmart, the country’s largest retailer by revenue, merchants almost a year ago bought slightly more holiday décor than they did the previous year, based on economic forecasts and other indicators at the time, said a spokeswoman.
But demand has surpassed those estimates and came earlier than last year, said a person familiar with the situation. Walmart would like to have more to sell, the person said, and is about a week ahead of its typical holiday sales patterns.
Angie Rojas-Lindsey is decorating as much as possible this year as she recovers from an early November Covid-19 diagnosis, she said. “There is nothing to do so why not spend time making your home beautiful,” said the 44-year-old technology sales executive who lives in Sioux City, Iowa.
She had to go to a half-dozen stores this week to find what she wanted because shelves are unusually picked over, she said. To secure a sold-out yard gnome from Target she signed up for online alerts, she said, then convinced the store to sell her the floor model. “The Target worker climbed up the display and cut it down with a box cutter,” she said.
Costco is already sold out of gift wrap and holiday décor in many areas, finance chief Richard Galanti said on a call to discuss earnings Thursday. The warehouse retailer decided to buy more “basic needs for the house,” such as barbecue grills and pressure washers, he said, and less décor, in line with pandemic buying trends earlier this year.
“We’re running out of some of those decorative things a week or two earlier than we would like to,” though overall sales are very strong, he said.
In recent weeks, several large retailers have reached out to Christmas Central, a mainly online seller of lights, artificial trees and décor, looking for more inventory for stores, said Nathan Gordon, Christmas Central’s president. The firm, which sells holiday goods on other retailers’ websites as well as on its own site and in four bricks-and-mortar stores in Buffalo, N.Y., had to decline the requests, Mr. Gordon said. The company’s November sales were nearly double those of last year, he said, and it has had to restrict sales through its retail partner websites to keep up with demand.
Christmas Central anticipated robust demand this year as the pandemic forced more sales online, Mr. Gordon said. “Our biggest challenge is really trying to keep up with the orders” inside warehouses and with delivery firms, Mr. Gordon said. “We want everything to arrive on time.”
In recent weeks, traffic to stores has been lower than last year, while online sales surge, according to firms that track traffic and sales. That shift is straining delivery networks. Shippers are limiting capacity to some retailers, and deliveries are being delayed in some cases.
Shoppers aren’t just buying more, but more products in line with pandemic lifestyle changes, said some retail executives. At Dollar General Corp. , the dollar-store chain with more than 17,000 U.S. stores, sales of wrapping paper are higher and gift bags lower than last year, said a spokeswoman. The company believes more customers are wrapping gifts to ship, instead of exchanging gifts in person, she said.
Demand for do-it-yourself holiday items has been strong this year because shoppers are looking for something to do, said Laura Denk, chief merchandising officer for Michaels Cos., a crafts retailer with more than 1,200 stores. Comparable sales, those from stores or digital channels operating for at least 12 months, rose 16.3% during the quarter ended Oct. 31.
Earlier in the year, the company bought more do-it-yourself wreath, ornament and other crafting supplies than last year to stock stores this holiday. “We did not pull back,” Ms. Denk said.
Demand is still so high, there are “a few things I wish I had a little bit more of,” she said.