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Shop Now for Christmas Before It’s Too Late

by Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer / October 7, 2021

Robert Stoll, Financial Advisor & Chief Investment Officer at Financial Design Studio, Inc.

Supply disruptions and higher prices have marred the post-pandemic world. Despite assurances from authorities and economists that these effects are “transitory,” the fact remains that they’re bad and not getting better soon. With Christmas 2021 shopping on the horizon, this becomes an even bigger issue. Store inventories are lean and ships delivering Christmas goods are stuck in ports. Of all the years NOT to procrastinate with your Christmas shopping, this is the year. Shop now for Christmas before it’s too late!

Lean Store Inventories Mean Gift Scarcity

The pandemic has exposed how interconnected our global economy is. While it was relatively easy to shut everything down when COVID started 18 months ago, getting supply chains back online has proven difficult. 

You’re not dreaming if you’ve noticed bare shelves at the store, even big box stores. Goods sell out and then take an eternity to get back in stock. Current store inventories are at remarkably low levels for any time of the year, but particularly heading into the Christmas shopping season.

Inventory and Christmas 2021 Shopping

At this stage of the game, it’s extremely unlikely that goods will flow into inventories before Christmas. Put another way, what you see on the shelves right now is likely what you’re going to get for Christmas. So if you see a gift idea, better get it now before it’s gone!

Will Inventory Get Stocked Before Christmas? Highly Unlikely

If inventories are lean today, a late rush of shipping deliveries can replenish them. Is that likely for Christmas 2021? No.

Shipping lanes have been severely disrupted since the global economy reopened. Companies large and small have rushed to get inventory at the same time, which has meant that space on a containership is a precious commodity. 

Currently, the shipping industry is experiencing its worst period ever for delivery reliability, according to Sea Intelligence. And it’s been getting worse throughout the summer.

Low inventory Christmas 2021 Shopping

Whether you’re a farmer waiting for new tractor equipment or a family waiting for that bedroom set to be delivered, everyone is experiencing delays in getting what they want. If we already have lean inventories today, and the prospect of replenishing them before Christmas is low, the logical conclusion is that now is the time to buy Christmas gifts before it’s too late.

Now the Bad News: Stuff Will be More Expensive!

We’ve written about the prospect of higher inflation many times in the past year. (See here and here). Prices for everything are going up, from goods to services. 

Economics 101 tells us that when supply is short and demand remains the same (or goes up), prices have to rise. We see this every Christmas season with the “hottest toy” of the year. They get snapped up early, and then late shoppers have to spend 2-3x the original cost to get it from someone on eBay.

The shipping problems above have translated into a feeding frenzy for space on ships. Companies desperate to get inventory must pay high prices to get the goods they want, as this chart from Alphaliner shows.

Shipping Prices

I’m not a retailing expert, but I have a very hard time believing the typical Black Friday deals are going to be around this year. And forget those last minute discounts stores usually offer to those of us who like to wait until the week before Christmas to shop. With inventories lean and consumers flush with cash, my thought is that prices will actually go UP as the Christmas shopping season progresses.

Set a Christmas 2021 Shopping Budget and Stick to It

The setup for Christmas shopping this year poses a risk to consumer wallets. Every year, many consumers overspend during the holidays and then spend the next six months paying off credit card bills.

With lean inventories and higher prices for Christmas 2021, this dynamic can be even more dangerous for consumers. Our advice – which is what we try to do with our own family budget – is to pick a spending number for Christmas and stick to it. That may be hard this year as gifts are scarce, but if that means buying everyone cheaper or smaller gifts, so be it.

Here’s another idea: make a family commitment not to buy gifts this year. In 2008, when the world was falling apart in the middle of the Great Financial Crisis, my family – Mom, Dad, and siblings – committed to skip Christmas shopping that year. It was by far the most enjoyable Christmas season I can remember since the days of waiting for Santa Claus to come down the chimney. Turns out, taking away the stress of a) figuring out what to buy for people, and b) spending money doing it was the big factor in making Christmas 2008 such a wonderful season. 

Whatever you and your family choose to do for Christmas, our advice is to put your shopping shoes on now. If you think you’re going to buy last minute gifts at the store or on Amazon, you may be in for a rude awakening this year!

Ready to find out more?

Contact us today for a free 30-minute consultation!

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Rob Stoll, CFP®, CFA Financial Advisor & Chief Financial Officer

Rob has over 20 years of experience in the financial services industry. Prior to joining Financial Design Studio in Deer Park, he spent nearly 20 years as an investment analyst serving large institutional clients, such as pension funds and endowments. He had also started his own financial planning firm in Barrington which was eventually merged into FDS.