It’s that time of year when twinkling holiday lights, visits with Santa and piles of wrapped gifts under the tree come to mind. Those cheery images, though, are increasingly overshadowed by unsettling news clips of idled ships loaded with cargo, threatening to spoil the holidays.
A perfect storm of soaring consumer demand, acute labor shortages and pandemic-driven factory slowdowns has fueled global supply chain snarls that have periodically thinned store shelves, led to far more “out of stock” responses to online shopping queries, and contributed to spot shortages of Starbucks Frappuccinos and branded coffee tumblers.
This story is for subscribers
We offer subscribers exclusive access to our best journalism.
Thank you for your support.
The reassuring news is that “shipageddon,” as one retail analyst calls it, is not likely to rob of us our holiday gift-giving largesse or dampen our food-centric celebrations. Behemoth retailers like Target and Walmart moved quickly to charter their own container vessels to bypass logjammed ports, and many San Diego shop owners, seeing the warning signs early, bulked up on inventory to be prepared for the financially crucial holiday season.
Local restaurateurs, experiencing shortages of their own, have had to periodically pivot on their menus — think Krug champagne instead of Veuve Clicquot and strip steak standing in for a pricier New York cut. Others have had to grapple with monthslong delays in much-needed kitchen appliances and restaurant furnishings, but it hasn’t stifled their operations.
“I speak to a lot of retailers and I’ve yet to have one tell me they don’t have enough merchandise to get them through the holiday,” said Marshal Cohen, who has been following retail and consumer trends for more than 30 years, much of that time at The NPD Group, a market research firm. “There are certain industries with categories that certainly don’t have product like large appliances so you might have to make concessions, like trading over to get a different brand or model.
“So yes, there’s a backup at the dock, there are ships out at sea, but what I am saying is the severity of the story is a very short story line. There are retailers figuring out how to get goods. Shipageddon is not the death of retail.”
Be prepared, though, for price increases, whether you’re loading up your cart with Barbies and Hot Wheels or ordering a latte and avocado toast at your local coffeehouse. Business owners and manufacturers cannot entirely absorb the exponential rise in transportation costs.
Like retailers, consumers have been savvy in responding to escalating concerns about shipping delays and product shortages. They’re shopping early, and stores are accommodating the trend with much earlier “Black Friday” sales, some of them launching in October. Owners of the San Diego-based toy store chain Geppetto’s and the women’s boutique Madison, both of which offer complimentary gift wrapping, have noticed many of their patrons taking advantage of the free service far earlier than normal.
“We started seeing people asking for Christmas and Hanukkah wrap in September,” said Brian Miller, owner of nine Geppetto’s stores located throughout the county. “We went through paper in September and October more than we ever have.”
The National Retail Federation expects a record holiday shopping season, projecting that sales for November and December will grow between 8.5 percent and 10.5 percent, approaching $859 billion, not including sales related to restaurants, gas stations and auto dealers.
“Dockworkers are unloading ships as fast as they can, but the challenge is to move the containers out of the ports to make room for the next ship,” Jonathan Gold, federation vice president for supply chain and customs policy, said in a statement. “Retailers have enough inventory on hand to make sure shoppers won’t go home empty-handed this holiday season. But there are still items sitting on the docks or waiting on ships that need to make it to store shelves and online sellers’ warehouses.”
A recent survey by Union Bank found that 2 in 5 Californians were planning to shop earlier than normal this holiday season, with the vast majority saying they were doing so to avoid crowds, shipping delays and inventory shortages.
Kay Hansen, a Del Mar interior designer, said she started her holiday shopping about four weeks ago. News of a mangled supply chain inspired her to start early, she said.
“Normally I don’t shop that far in advance and I like to support local retailers,” said Hansen. “I’ve been fortunate in terms of my particular wish list. At this point, I found most of the things my grandchildren wanted.”
San Diego State University business professor Robert Showghi, whose expertise is in supply chain management, says he is not overly concerned about looming merchandise shortages, although he notes that such items as popular toys, sneakers and hot electronics — like gaming consoles and laptops — will likely sell out fast.
“I wouldn’t wait for the traditional Black Friday and Cyber Monday sales because items are disappearing fast,” he said. “During the month of October, according to Adobe Analytics, there were 2 billion out-of-stock messages from online retailers throughout the U.S. sent out, which is very unusual. That’s up 172 percent from pre-pandemic levels.”
When shop owner Gina Stark renewed the lease in May for her boutique at the Headquarters at Seaport, she was so excited she went on a buying binge, which turned out to be a wise decision. Later on, in August, when she started hearing growing concerns about shortages of goods, she decided to drive up to Los Angeles to do some of her buying directly rather than rely on shipping her merchandise.
“So I kind of overbought, which is fantastic, because we have so much merchandise,” said Stark, co-owner of Madison, which specializes in handbags, women’s apparel and fashion accessories. “I have coats we haven’t even put out on the floor. I have merchandise waiting at my sister’s house, adorable pajamas and loungewear that I wasn’t going to put out until December but I’m going to now because we’re noticing everyone is reading the news — ‘You better go shop now.’ We just had two of the strongest days since the entire lockdown.”
Barbies, Legos and jigsaw puzzles
Walk into any one of the Geppetto’s toy stores, and they look amply stocked, brimming with board games, puzzles, Barbies and Lego sets. That’s not to say there won’t be shortages for patrons doing their shopping closer to Christmas. And there are some items, like the Operation board game and the Faux Bow archery set from Marky Sparky Toys, that remain out of stock.
The easing of pandemic restrictions earlier this year unleashed an unexpected buying spree, said owner Miller, that began to eat into the inventory he was stockpiling for the holidays. Still, he continued to place orders in anticipation of potential shortages, a strategy that has paid off, even if he can’t get everything he wants.
“If I ordered six items from a game manufacturer, maybe I’d get two and it takes a little while to get those; two won’t come at all because of problems manufacturing, and two will come much later,” Miller said. “We have 20 percent more inventory than we’d normally have, which sounds great, but the demand was very strong early this year so I don’t know if that will be enough in some areas. If someone wants the Operation board game, will they buy Candyland instead?”
Miller had one customer who wanted to order the largest jigsaw puzzle — 40,000 pieces — made by the German company, Ravensburger, featuring memorable Disney moments, but it’s out of stock with no timeline for when it might be available. The global leader in jigsaw puzzles, the company has sold more than 1 billion puzzles worldwide since 1964.
Filip Francke, CEO of Ravensburger North America, Inc. and global head of games, said that while the company has not had any production issues with its puzzles, delivery delays have persisted in terms of bringing goods into the U.S. and then transporting them to and from its distribution facilities in North America.
“We decided to take a step back in August to alert our retailer partners, like Geppetto’s, about possible delivery delays and closed our ordering window earlier than usual,” Francke said. “We didn’t want them to end up with empty shelves so we tried to give early enough notice so they could source other products in time.
“While some Ravensburger puzzles may feel elusive, I’d encourage shoppers to regularly pop into your local stores and keep checking online at various retailers. We’re restocking and updating availability on different images each week. And, if you see one, grab it.”
San Diego-based Funwares, which manufactures and distributes its toys and other gift merchandise to such companies as Kohl’s, CVS and independents like Geppetto’s, has had a slightly easier time navigating supply bottlenecks because of owner Rob Kushner’s longtime presence and connections in Hong Kong. That didn’t help him, though, in getting a break on the meteoric price increases for transporting the goods here. Where he used to pay between $3,500 and $4,000 to transport a 40-foot container full of his merchandise, he’s had to shell out as much as $25,000 for that same container, although prices have started dropping more recently, Kushner said.
A recent order that only just arrived — including 10,000 of his company’s best-selling Minute of Fun party games —was placed with the factory in mid-August, it didn’t leave China until Oct. 2, arrived at the Long Beach port Nov. 1 and made it to Funware’s warehouse 11 days later. Kushner said he’s noticed some retailers like Kohl’s have experienced some emptier shelves because they wrongly assumed orders they purchased would get to them on time.
“The retailers who took possession of product early are in a good position,” Kushner said. “They may not have what they originally planned for but those who decided to order different things are in a much better position than the ones who are still thinking they are going to get what they ordered many months ago.”
Like everyone else, Del Mar-based Benno Bikes, which produces electric bikes, is facing the unpleasant side effect of supply chain delays — “humongous price increases,” said CEO Benno Baenziger. On top of this, the popularity of e-bikes has grown over the past couple of years and the demand for bikes remains steady, he said.
While his company has done everything it can to diversify its suppliers, there is only so much it can do amid coronavirus restrictions and labor shortages, which vary by country, Baenziger said. And bikes can only be built as fast as it takes for the slowest parts to arrive, some of which are coming from Vietnam and Japan.
“We’ve been placing orders much earlier, and we’re placing bigger orders and so basically now our business is mapped out until the end of 2023 — now we’re starting 2024,” Baenziger said.
As for anticipated price increases, he said the e-bikes he’s selling to distributors will cost more but “some of it ends up our loss since we’ve already committed to our own pricing and are locked in.”
Lattes, steak costing more
Soaring costs are also bedeviling local restaurants, which are also seeing periodic shortages in to-go containers for food and beverages, some European imports and wines. David Spatafore, whose company, Blue Bridge Hospitality, oversees the food hall at Liberty Station, said that because of difficulties sourcing plastic cups, employees at Mess Hall and Bottlecraft at Liberty Public Market have to politely decline requests for to-go glasses of water because the cups are desperately needed for beer. And he had to sub Krug for the Veuve Cliquot that was being served for $15 a glass at happy hour at his Stake and Little Frenchie restaurants in Coronado.
Pam Schwartz, co-founder and general manager of the Ranch 45 restaurant in Solana Beach, said she’s been able to access 16-ounce cups for takeaway orders but couldn’t find lids, she’s been unable to get enough straws and couldn’t find large enough bags for to-go orders.
And with beef prices continuing to rise, Schwartz had no choice but to substitute a flat iron steak for the New York roast steak she uses for multiple menu items because the price nearly tripled.
Because she relies on local producers for most of the food she serves, she hasn’t had to make any other menu pivots, but wine is another issue. “My wine suppliers have ships full of wine sitting out in the ocean that can’t get unloaded,” she said.
San Diego-based Communal Coffee, which just opened a third location — in Oceanside — has had to raise the prices on 30 percent of its menu items by 20 percent for a variety of reasons, including the steadily increasing labor costs, said owner Jen Byard. Communal’s specialty honey lavender latte, which used to sell for $5, is now $5.50. and avocado toast, its best-selling item, has gone from $8 to $9.50. Meanwhile, the floral refrigerator that Byard has been waiting on for two months for her Oceanside store still hasn’t arrived because the custom doors are made in China.
Spatafore says that almost everything he is purchasing, from high-end beef and imported cheeses to new kitchen ranges, is costing far more than ever before. He says he’s paying nearly $30 a pound for prime ribeye served at his Stake Chophouse & Bar in Coronado right now. It was $23 a pound two months ago. Even worse, he said, are the price hikes for restaurant-grade appliances.
“I was talking to our supplier last month who said they’re anticipating price increases. By the time we spec’d what we wanted and put it out for quote, the price had increased Nov. 1 and then was supposed to go up by as much as 20 percent Jan. 1. The excuses are boundless. And the freight was $650 on just one refrigerator.”
In general, grocery stores are well positioned for the holidays, although there may be the occasional shortage or out-of-stock item.
Wade Yenny, director of grocery at Jimbo’s, said several holiday-themed items have been canceled or become unavailable, while others are taking longer to arrive.
Customers at the store’s four locations might notice a few new brands that are being used as replacement items, but Yenny said they all meet the same quality standards the store prides itself on.
Melissa Hill, spokeswoman for Albertsons/Vons, said it has been working with vendors and suppliers to ensure that customers have what they need for the holidays.
“While certain categories might be constrained as we near the holiday,” she said, “our stores have been diligent in providing alternative solutions and working quickly to fill any out of stocks.”
Oceanside resident Erica Roth, who regularly frequents the HomeGoods in Encinitas, which stocks home décor and specialty food items, was on the hunt a couple weeks ago for napkin holders and came up dry.
“I came here to try to get Thanksgiving stuff last week. Nothing. Zippo,” Roth said. “I was looking for napkin holders, like little fans — nothing. I had to make my own.”
The week before Thanksgiving, the shelves of the Encinitas store were spilling over with red holiday décor, fluffy Christmas gnomes and all kinds of peppermint-flavored sweets. According to Ernie Herrman, the CEO of HomeGoods’ parent company TJX Companies, Inc., they have been buying with longer lead times from their vendors to account for supply chain delays.
Roth noted that her friends came by the store recently, but they kept driving after they saw there was a line out the door and people walking out with Christmas décor.