Veena Marcano usually starts her holiday shopping early, but this year she set a new personal record: July. Given everything she had heard about shipping delays, product shortages and price increases, she figured she had better get a move on. So she began hitting retailers like Amazon, T.J.Maxx and Burlington, diligently stocking up on gifts for her two kids, nieces and godchildren. Well before Black Friday, she had all that she needed—and then some.
“I have more gifts than kids needing gifts,” says Marcano, 28, who lives in Pennsylvania, and expects to return some books and a craft set.
She’s not alone. For many Americans, the holiday scramble started long before Thanksgiving, with 45% starting their holiday shopping by early October, according to McKinsey. One defense mechanism: Overbuying, with one in five shoppers saying they are ordering more gifts than needed in case some items are delayed or canceled, according to Oracle.
“I think consumers are doing a little bit of hoarding. Things that might not be perfect gifts are still being held onto,” says Anisa Kumar, chief customer officer at retail technology company Narvar. If they get their hands on something better? “They’ll return it post-holiday.”
Panic, it seems, is in the air. Shoppers have heard about the snarled global supply chain for months, which has caused shortages and delays of everything from cars and fridges to toys and shoes. And now they’re coming face-to-face with it as they do their holiday shopping. There were 2 billion out-of-stock messages online in October, with the dreaded alert popping up on one of every 50 pages a shopper visited, compared to about one in 140 pages before the pandemic, says Adobe. Half of people say they expect packages to take longer to be delivered this year, according to Narvar.
Kevin Sims and his wife started shopping in earnest for the holidays in early October, after the Halloween costumes they ordered on Amazon weeks in advance were delayed, forcing them to think up alternate ideas. They had planned a Super Mario theme with their twin children and dog, and even if one item were missing, it would threaten the entire ensemble. The costumes showed up just in the nick of time, but they were spooked.
“It got us thinking that if we want to have a good Christmas, we have to start ordering now,” says Sims, 39, a technical writer for Hitachi Vantara who lives in San Jose, California. “Some things may not get here at all. Some things may get delayed.”
Shoppers are fighting over a slimmer selection of inventory. Victoria’s Secret is facing delays on 90 million out of 200 million pieces of merchandise that were supposed to have arrived for the holiday season, including 25% of its pajamas. Toymaker Basic Fun intentionally left 160,000 Tonka trucks behind in China until after the holidays, because it was too expensive to ship them. Williams Sonoma, Inc., which owns Williams Sonoma, Pottery Barn, Crate & Barrel and West Elm, still has “a lot less inventory” available than it would like, said CEO Laura Alber on the company’s earnings call last week. The seasonal items it does have are “flying” off the shelf, she said.
“With broader awareness of potential global supply-chain disruptions, we’re seeing many consumers looking to purchase products as soon as they are available in our stores,” said Bill Bortz, executive vice president of merchandising at Lowe’s on the company’s earnings call.
One in five shoppers say they are ordering more gifts than needed in case some items are delayed or canceled.
CityRow, which sells a $2,100 smart rowing machine, received a spike in orders in October and heard from dozens of customers who wanted to make sure the machine would be delivered in time for Christmas.
Retailers are egging shoppers on. Amazon, Target, Best Buy and Lowe’s rolled out Black Friday-like deals in October, while Walmart followed in early November. Apple has a red banner at the top of its website urging people to shop early if they want the best selection of items. That has further catalyzed spending, with UPS citing data that half of holiday shopping could be done by the Monday after Thanksgiving.
The deals are less enticing, though, with Black Friday discounts in the 5% to 25% range on average across categories, rather than the normal 10% to 30% range, says Adobe. When you couple that with inflation, consumers will pay 9% more on average during Cyber Week this year, compared to last year, Adobe says.
“The pitch on Black Friday is we’ve got it—not we’ve got it cheaper,” says Jay Foreman, the CEO of toymaker Basic Fun, which sells Care Bears, Tonka Trucks and Lincoln Logs in Walmart, Target and Amazon.
Relaxed, pandemic-era policies could further exacerbate product shortages. For instance, Target lets shoppers buy stuff online—including its hot-ticket Black Friday deals—and arrange to pick it up later, holding inventory for three days before putting it back on the shelf and issuing a full refund. In the meantime, that merchandise isn’t available to other shoppers.
Return policies have gotten more generous, too. Retailers like Amazon, Best Buy and Macy’s are giving shoppers an extra month to return holiday gifts, now allowing items that were purchased as early as October to be returned until the middle or end of January; Before the pandemic, the holiday return window applied only to items purchased in November or December.
It will contribute to a returns avalanche after the holidays, a phenomenon already so big that January 2 has been dubbed National Returns Day. Last year, Americans returned $428 billion in merchandise, up from $369 billion in 2019.
“Retailers will see the boomerang of overbuying come back around post-holiday in the form of returns,” says Mike Webster, general manager of Oracle’s retail group.
It typically takes three weeks for a return to be processed and put back on the shelf, but after the holidays, retailers are sometimes working through the glut of inventory until April or May. “That’s a long time to have inventory out of stock,” says Narvar’s Kumar, especially when it relates to seasonal items. Half of returns never make it back on the shelf, instead getting liquidated, destroyed or thrown in a landfill, according to Forrester Research.
In the face of the holiday hysteria, some shoppers are looking for zen. Corinna Bechko, 48, began getting nervous in October and quickly went out and did half her holiday shopping, then decided her friends and family really shouldn’t be upset if a gift was late because of the supply chain. She certainly wouldn’t hold it against anyone.
“I was stressing about it a lot,” says Bechko, who works at a museum in Los Angeles. “Then I thought of everything there is to stress about—this is not one of them.”
By Lauren Debter, Forbes Staff