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Richmond-area retailers fear global supply-chain issues causing shortages and could impact holiday sales
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BUSINESSES TAKE PRECAUTIONs

Richmond-area retailers fear global supply-chain issues causing shortages and could impact holiday sales

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Kate Stottlemyer, president of Tweed, talks about how they managed to have products for the fourth quarter despite problems with the global supply chain. Tweed is a home-furnishings and gift store in the Short Pump are of Richmond, Va. Video by Alexa Welch Edlund/Times-Dispatch

Kate Stottlemyer is worried about disappointing customers this holiday season. And she is not alone.

She typically would have dozens of water lantern holiday decor merchandise to sell at Tweed, her boutique home-furnishings and gift store in the Short Pump area of western Henrico County.

But not this year. Her store has just a handful of these water lanterns, essentially light-up snow globes inside of a lantern that show a Nativity scene, Santa and his reindeer or an angel that continuously swirls glitter.

Blame the shortage on the bottlenecks and disruptions occurring in the global supply chain, which is impacting retailers from large chains to small independent shops ahead of the crucial holiday selling season. The problems could mean empty store shelves, a limited amount of merchandise and higher prices as retailers scramble to get items.

“It’s just a really pretty decoration and we sell a lot of them,” Stottlemyer said about the decorative water lanterns.

“They are slowly trickling in. We’re just still hopeful that they’re going to get here in time for people to still buy them before Christmas,” said Stottlemyer, president of Tweed, located in The Shoppes at Westgate.

“Disappointing customers — that’s the worst part of it for me,” she said. “You know, it breaks my heart when a customer comes in looking for something they know we’ve always had.”

She ordered the water lanterns in January, expecting she would get her shipment during the summer. Her vendor doesn’t know when the merchandise will arrive either.

Tweed’s shelves are fully stocked, she said, but between 15% and 20% of the merchandise that Stottlemyer ordered earlier this year hasn’t arrived.

“We still have a lot of products that’s set to come in, and I’m just not sure when it will get here and how close it will be to Christmas,” she said.

Other retailers in the Richmond region are experiencing similar supply issues.

Home furnishings store Tinker’s still hasn’t received its large order of battery-operated taper window candles that were supposed to have arrived in September. Tinker’s sold $13,000 worth of the window candles last holiday season.

“They’re a huge, huge seller for us,” said Sharon Coleman, who co-owns the store at 2409 Westwood Ave. in Richmond. “And I can’t get them.”

Nadira Chase, the owner of Adiva Naturals, the retail shop in Shockoe Bottom that makes and sells skin care and hair products, is considering changing some of the containers she uses for her products because of a shortage of jars and lids. The containers have been on back order for months.

“I can get some jars, but I can’t get the tops. Or there are tops, but I can’t get the jars. It’s out of stock everywhere,” Chase said. “And if I find them, they are overpriced, so when I do find it, it’s double or triple the price.”

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The global supply-chain problems seem to be a result of several factors:

  • Factories in Asian countries had to temporarily shut down because of surges in the coronavirus.
  • A lack of shipping containers caused backups at ports and warehouses overseas.
  • Cargo jammed U.S. ports, mostly on the West Coast.
  • There’s a shortage of truckers to transport items to retailers.

“It’s become quite a challenging year,” said John Toler, the CEO of Evergreen Enterprises, the South Richmond-based global home decor business that designs, manufactures and distributes more than 10,000 home decor, sports and garden products and accessories to more than 15,000 retailers. The company also owns retailer Plow & Hearth.

“We’re working very hard to overcome it and service our retail clients,” Toler said.

The disruptions are weighing heavily on small-business owners, according to a survey conducted in late October by the National Federation of Independent Business, which represents small- and independent business owners.

About 48% of the respondents reported that supply-chain disruptions are having a “significant impact” on their business, while 34% of owners reported having a “moderate” impact. Of small-business owners who rely on holiday sales for a significant part of yearly revenue, 38% of them believe supply-chain issues could hurt holiday sales.

The survey also found that 90% of small-business owners expect the disruption to continue to impact their businesses for five or more months.

According to a survey by Digital.com, the online review website for small business, 58% of retailers plan to raise prices to cope with inventory shortages and supply-chain challenges. One-third plan to increase prices by 40% or more.

The National Retail Federation, the nation’s largest retail trade group, predicts holiday sales will be the highest on record — increasing between 8.5% and 10.5% compared with 2020. But some observers believe supply-chain shortages could dampen sales.

“With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season,” said Jack Kleinhenz, chief economist for the retail group. “However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”

Retailers and analysts offered words of advice for consumers: Shop early to avoid a lack of inventory, and buy it when you see it because it might not be there the next time.

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Tinker’s is still waiting for merchandise from one of its vendors, which supplies about 50% of its holiday merchandise, Coleman said. Those items were shipped to the Port of Long Beach in California, which has experienced backlogs of shipping containers for weeks.

“We were supposed to have it all by July. And of course, this year it became July, then August, and then it became September and now we still don’t have it,” Coleman said. “And nobody is answering the phones.”

She also is trying to decide what to do with the large order of battery-operated taper window candles that she hasn’t received.

“I went from [having] an $8,000 order down to $3,000 [order], and now I’m wondering about reducing that order again because I don’t know when I’ll get it,” she said. Or she might just cancel the order.

She is still waiting for about 25% of merchandise she ordered earlier this year to arrive.

“Christmas ornaments probably are the biggest thing that I don’t have,” Coleman said.

“Our store still looks fabulous,” she said. “But the problem is we won’t be able to reorder.

“Last year, every time things were selling really good, we reordered them and they came in. But that was last year. We can’t reorder things now. Companies aren’t even answering their phones. Some of them will send you a list of what they have in stock and that’s usually just random stuff that we wouldn’t want in the first place.”

She expects the global supply-chain issue to continue into next year.

“It is not going to be over just because Christmas is over,” Coleman said. “Some companies have already sent me paperwork that says this or that won’t be in until February and do you still want it. I am like, ‘No, why do I want Christmas ornaments coming in February?’ I need them now.”

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Tweed’s Stottlemyer took a calculated risk earlier this year that she hopes will pay off this holiday season.

In February and March, she began hearing rumblings that global supply-chain disruptions could get worse later in the year.

Unwilling to take a chance and not get the merchandise she — and her customers — want, she ordered tens of thousands of dollars worth of merchandise in the spring, or about three or four months earlier than normal.

Items from suppliers began arriving in early summer and were placed in the Tweed warehouse until they were put on the store’s shelves in recent weeks.

“We’ve had ornaments sitting in our warehouse since June when normally we wouldn’t have ornaments rolling in until much later like in September,” Stottlemyer said.

She also took shipment of paper napkins, plates, gift wrap and décor from Caspari in June — months ahead of normal. The vendor’s representative recently told her that other retail shops didn’t opt to buy early and now can’t get the merchandise.

The downside to early ordering was having to pay for the merchandise months earlier than normal, which put a squeeze on the store’s available cash flow.

“We paid for it earlier than we planned to and it’s sitting there for quite a while before we’re able to sell it. It’s definitely been a challenging risk,” she said.

“But on the flip of that, I hope it will pay off. I feel 100% confident that it will,” Stottlemyer said. “This is such an important time for our business, so it was worth the risk to make sure we had product because to me it would have been a bigger risk not to have product during the fourth quarter for people to come in and shop.

“I feel confident we will have fully stocked shelves, and I think we’re going to have new, fresh product rolling in regularly throughout the holiday season which we don’t normally have.”

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At Little Nomad, a trendy children’s clothing store on West Broad Street in downtown Richmond, co-owner Anthony Bryant also took proactive steps to make sure his store had merchandise.

“I went ahead and ordered a lot of that stuff in January and February. And I just held it in the store because I didn’t want to take the risk of this piece or that piece not being available,” said Bryant, who owns the store with his wife, Nora.

“I didn’t know it was still going to be as chaotic as it still is,” he said. “I think it’s been a great decision. It’s really saved me money in the long run and hopefully everything sells the way they’re supposed to.”

Ordering early has had its challenges, he said. Some of the orders came in later than promised, and apparel merchandise is still coming in — months late. He figures he has about 90% to 95% of the inventory he has ordered.

“Everything hasn’t gone perfectly,” he said. “There are some days I have had a few orders canceled for a couple of reasons. But for the most part, the forecasting and that planning at the beginning of the year I feel is paying off for us.”

Little Nomad has more merchandise in stock now than it ever has in the four years since the store opened, Bryant said. He knows he took a risk, but he believes it will pay off.

“You really have to be cognizant as to what you’re buying. It’s not like we brought in a new product that we were unsure of. The things that we bought are our tried-and-true pieces that we know will sell on a pretty consistent basis,” he said. “So that kind of eased things as well.”

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Adiva Naturals retail shop in Shockoe Bottom is considering changing containers for some products because the store can’t get either the right jars or tops.

Chase, the owner, said she is looking at putting them in a squeeze tubes instead. However, doing that means having to change the label, which adds to the cost.

“It has been extremely frustrating and extremely expensive,” she said. “If I can find something that is suitable, it may not be what I want, but if I can find something that is suitable, then I can pivot.”

One solution Chase is considering: implementing a refill program where customers hold on to their containers so her business can refill the item.

If the supply issue isn’t resolved by January, Chase fears she is going to have to raise prices.

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Evergreen Enterprises has seen the global supply-chain problems from different perspectives.

It makes many of the items it sells at a plant in Ningbo, China, a city outside Shanghai, and contracts with other plants elsewhere in Asia. The company then has those items shipped from the factories to the U.S. And once it arrives at one of the company’s warehouses, merchandise is sent to retailers.

Evergreen’s Toler said it is costing more to ship merchandise from China and that it has taken 30 to 45 days longer than expected for items to make their way from Asian markets to the U.S.

There also has been a surge in shipping costs, Toler said. At this time last year, ocean freight rates from Ningbo to the Port of Virginia in Norfolk were about $5,000 per 40-foot container, he said. That same container cost about $10,000 in the spring, then rose to $17,500 in early August and reached a high of $21,800 in late September. Rates dropped to about $16,500 in late October, he said.

The company is passing along much of those higher costs to retailers, he said. “Retailers are taking that elevated wholesale price they are paying and they’re trying to charge more in store. Almost all this is being passed along to the end consumer,” Toler said.

Ting Xu, Evergreen’s co-founder and chairwoman, said having a factory and a sales office in China has given the company a competitive edge in a crisis like this.

“Our dedicated staff there has been supporting us to make sure we get merchandise made ahead of traditional production schedule. They worked hard to get the containers. We had people on the ground to move us through the supply chain,” she said. “Everyone is working together on the common goal.”

Even though the company shipped 95% of its Christmas wholesale orders to retailers by the end of September — 30 to 45 days later than expected — it is still receiving merchandise from overseas at its warehouses for this year’s holiday season. It has more than 200 shipping containers to land in Norfolk this month.

The company’s warehouse next to its corporate offices off Midlothian Turnpike is “busting at the seams” with merchandise right now, Toler said. Typically, the warehouse would be about 70% full at this time of year.

Merchandise that was intended to be here in August or September is now showing up largely delayed because of COVID-19 outbreaks in Asia that shut down factories.

For instance, this past week, Evergreen was unloading a shipment of NFL-related products that should have been at stores 30 days before the start of football season.

“It’s showing up here in November because of the delays. Cambodia had COVID outbreaks in the factories that basically shut down those kinds of things. So in this case, the issue was probably not shipping but probably COVID in the home country,” Toler said.

Another reason for the hefty amount of merchandise at its warehouse is Evergreen is getting products here months earlier than normal — such as outdoor wood furniture and other spring and summer merchandise — that usually wouldn’t arrive until January or February. It is doing so to make sure the company has items to ship in time to retail customers.

A third reason for an overflowing warehouse is Evergreen has ordered more of its best sellers, such as flagpoles and flagpole brackets, to make sure the company has those items in stock.

Will manufacturers, suppliers and retailers be dealing with supply-chain challenges next holiday season?

“Everyone we talked to in the business and the industry sees these supply-chain issues that we have right now — port congestion, container availability, expense associated with containers — certainly going into 2022,” Toler said.

“How deep into 2022? We don’t know,” he said. “I would think you can make a statement between the ocean freight rates, the congestion, the raw material prices we’re seeing increases on, and then other general inflation, that Christmas items probably next year will be more expensive than they are this year if these trends continue.”

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