Business 14/11/2021

No shortages expected over Christmas

Shops forecast no shortage of products, as companies have enough stock to end the year. Concern is centered around in the increase in transport and energy costs

4 min
Image of the Port of Barcelona, the main gateway for goods into Catalonia.

Barcelona"There is a bit of scaremongering", says Àlex Goñi, president of the trade sector at Pimec, the Catalan SME association. Traders will start their most intensive stretch of the year, going from Black Friday to Christmas, amongst doubts and rumours about the sharp rise in the price of products and stockouts.

Traders, however, will seek to reassure consumers with a simple message: the problems of shortages, transport and logistics are not new, but "come from the spring," explains Alejandro Lozano, head of technology goods, DIY and hardware at Aecoc, a Spanish association of large trade and logistics companies. Companies, large and small, have anticipated the problems by accumulating stock for months, a practice, on the other hand, already common before the pandemic in the run-up to Christmas. Christmas, then, should hold no surprises, as long as the coronavirus remains under control.

"We have supplies of almost everything," says Goñi, despite admitting that all traders are affected by increases in transport prices, as well as the logistical chaos at international level. In this sense, Lozano recalls that the price of shipping a full container has gone from $1,500 to $15,000 in a matter of a few months, a fact that has caused a significant increase in costs for companies that import products from Asia to Europe - such as telephones or clothing - especially multinationals that depend on these logistics chains.

Another mechanism multinationals have to avoid shortages of certain products has been to "open stock in Europe," says Lozano. That is, companies unify their stock in the entire continent to prevent a country from running out of a particular product.

In addition to logistical difficulties, another worrying factor is the rise in the price of oil, which makes fuel and therefore transport even more expensive. Added to this are the sharp rises in the price of electricity and gas, which have direct repercussions on the costs of manufacturers and shops and can end up altering the final prices of products.

For the time being, inflation figures suggest that the bottlenecks suffered by industry globally and the rise in energy prices have not had much impact on the prices of consumer goods: prices rose by 5.8% year-on-year in October in Spain, but if energy and food are taken out of the ecuation, the increase is only 1.4%. "There will be no price increases, but perhaps there will be fewer promotions," explains the representative of Aecoc.

Despite the difficulties, in general traders will begin the campaign with some optimism. Goñi claims most of these problems "are temporary and not structural," so they are only of relative concern. In addition, no changes in consumer habits has been noticed compared to before the outbreak of covid. "The consumer wants to spend," says Lozano. "Christmas sales have been coming earlier and earlier every year," Goñi adds.

This is especially so since Black Friday became widespread in sectors such as electronics or fashion, but there is also a tradition of buying other products in advance during the holidays, for example, food. "People buy everything with time" to be able to plan the celebrations more calmly, he adds.

However, optimism does not hide that some sectors are better positioned than others to have a successful campaign. Those that are more exposed to international risks are potentially more likely to suffer, but companies have had room to prepare

Toys

Christmas routinely depletes most in-demand products

This year's peak sales season for toy manufacturers has been marked by rumours of stock-outs of some star products. In fact, some chains have set up waiting lists to buy some products, especially video game consoles such as PlayStation. However, high-demand products running out is not uncommon at Christmas time

Food

Fuel, the only variable that can make food more expensive

"I don't think there should be any problems," says Goñi, on the supply of food this Christmas in shops. The sector fears a rise in transport costs and, in the case of Catalonia, a possible strike in coming weeks. HOwever, on the whole, it is not suffering as much as other areas.

Electronics

Stocks save one of the most affected sectors by the crisis

As with toys, there have also been rumous of shortages of electronics.This is due to, among other factors, the shortage of microchips, which has severly affected production. Even so, the sector is not worried, since in principle stocks should be sufficient to last hrough Christmas, according to predictions based on historical figures.

Fashion

Demand back to normal while supply disrupted

After a 2020 of lockdowns and, therefore, much less spending on clothing, the fashion sector isrecovering its sales, both online - a channel that helped mitigate the impact of the pandemic - and especially in stores. If there are no new waves that force new restrictions, clothing stores, perfumery and other fashion products will achieve normal sales levels, close to those of 2019.

However, the sector is also affected by the current global logistical chaos. The sector's large chains, in particular, produce the bulk of what they sell in Europe in Southeast Asian countries. Freight price hikes, however, should not influence prices too much.

Household appliances

Price rises, as does quality

Premiumisation is a phenomenon that directly affects household appliance companies. The clearest example is seen in electric coffee makers, according to Lozano: during lockdown, families were able to spend more on appliances and "got used" to consume more coffee at home, so now they are willing to pay more to have a better coffee maker that makes better coffee. This makes prices go up, but because the quality of the products also goes up. Retailers are also noticing this phenomenon in personal care and hygiene products, such as epilators or shavers.

Do-it-yourself and homeware

A year of normalisation after a record sales year in 2020

In 2020, companies specialising in homeware and do-it-yourself products broke sales records. The long lockdowns derived an important part of household consumption to these products, while in 2021 companies are readjusting.

stats