Christmas gifts under threat

Combination of problems

“The shopping period should be good because people want to buy, the issue is our ability, especially in certain sectors, to get enough stock or to get orders on time to meet such strong demand as we see at Christmas,” says David Sánchez, head of Comertia, the association of retail family businesses.

There are a number of problems that have all aligned and that paint a worrying picture: many products, from microchips, toys, and electronics to clothes, and plastic or cardboard for packaging, come from Asia, where many factories have been shut down for months and where they are now experiencing power cuts. This has coincided with a recovery in consumption that has come faster and been more intense than expected, with the result that demand has outstripped supply. Added to this is the rise in the cost of raw materials, while logistical problems in maritime transport, the most widely used means of international trade, and a reduction in the number of ships, makes it more difficult and expensive to transport products from Asia to Europe.

If shops have not placed their orders well in advance, they may find that the products they want to sell will not arrive in time for Christmas (and that may also be true for some who did order well in advance). Soon after toy brands brought out their Christmas catalogues in November, they began warning that some of the gifts will not be available in stores until well into December. The fear is that there will be some goods that will not arrive in time and that the most requested products will sell out in the first days without enough time to restock before the Christmas shopping period ends.

“There are orders that will not arrive in time or will do so at a much higher price,” says Sánchez, although like other retailers he is keen to reassure shoppers: “There may be problems, but they will not be general and will only be with certain products, such as some latest models, games consoles, the latest smartphones, or that toy that all children want this year.”

Flexible shopping

The head of Comertia wants above all for unnecessary alarmism to be avoided “because that causes everyone to rush to get the same thing and then it runs out, as happened with toilet paper during the lockdown.” Sánchez advises “showing flexibility and purchasing intelligently,” which includes not leaving everything to the last minute and if the thing shoppers are looking for is not available that they accept an alternative.”

Joan Carles Calbet, who heads the retailers union, RetailCat, speaks along the same lines. Calbet admits that among retailers there is “some concern because although the health issue is now more under control and no new restrictions are expected, among the effects of the pandemic is a lack of raw materials and products, delays in orders, and above all an increase in prices that means retailers may have to gamble during a period that affects the results for the whole year.” According to data from Comertia, the Christmas shopping season, from Black Friday to Kings’ Day on January 6, accounts for some 35% of annual sales, although there are sectors such as toys in which the percentage soars to 70% during that time.

At RetailCat, Calbet insists that retailers will end up having a “more or less normal” shopping season, and he points out that “it’s already the case every year that you’re not going to find the season’s star product or fashionable toy if you go looking at the last minute.” However, this Christmas, he says, the problem “may be more pronounced and may affect more products,” and so he advises those people who know what they want not to wait because “later it will be harder to find and will be more expensive.”

In fact, the issue of prices is what worries the RetailCat head the most. “Inflation is at levels we haven’t seen for years and this ultimately also affects the margins of shopkeepers and the wallets of consumers,” he reflects. However, Calbet explains that the price increases “will not be linear” but will depend on “each sector, whether the shop has more or less stock, and the components in each product.”

Comertia estimates that prices may in some cases rise by 5% to 10% but “in other cases we won’t see any increases because there are alternatives available.” Álvaro Otal, manager of the Anceco association of purchasing centres explains that manufacturers and shopkeepers are resorting to various strategies, such as trying to expand their range of suppliers or looking for a local alternative wherever possible. Otal admits there will be cases where prices will go up, especially if the retailer’s costs have risen and their margin is much reduced, although he also says solutions will be found, such as keeping the price down by reducing the capacity of packages. In fact, the OCU consumers association warns that 7% of packaged foods have reduced their weight to hide price increases.

Otal points out that while the main advice for customers is that they buy their gifts sooner rather than later, in some cases this will not be possible because of so many delayed orders. However, the Anceco manager rules out supply problems in purchasing centres, which serve many small businesses, because their orders were placed so far in advance.