Lee Valley warns customers of delays of up to 1 year, higher prices to come
Supply chain issues show no sign of abating
Canadian retailer Lee Valley Tools has a bleak warning for anyone looking to get their hands on high-end garden shears, brass escutcheons or crokinole boards any time soon: good luck.
The Ottawa-based home and garden chain with 20 stores across Canada told customers in an email this week that it is sending out its Christmas catalogue "uncomfortably early" this year because it is anticipating major delays in getting its goods to market.
"The message for consumers is buy early, because there is no chance to reorder or to replenish [before Christmas]," said CEO Robin Lee in an interview with CBC News. He said that the inventory the company has now are products they ordered a year ago.
Lee Valley is just the latest company to warn of the massive problems it is seeing in getting its products from suppliers and manufacturers to the shelves — a complicated process known as a supply chain.
The COVID-19 pandemic waylaid the usual trends of supply and demand by wiping out both in early 2020 as factories shut down to keep workers safe, and consumers weren't in the mood to buy anything but the essentials anyway.
But now that things are slowly heading back toward some sort of normalcy, suppliers can't ramp up fast enough to keep up with booming demand of everything from cars to appliances to gaming consoles and even iPhones.
Shipping costs are a major factor, with the price to ship containers from Asia to the West Coast of North America more than quadrupling this year, one logistics firm told CBC News in an interview recently.
Labour shortages, fuel costs blamed
Lee Valley's CEO says labour shortages and higher fuel costs are contributing to higher prices.
"There are a lot of [shipping] containers out there, but the cost of moving those around has gone up. In some cases, orders of magnitude. We used to pay about $7,000 to bring a container from Asia, and the cost today is $34,000," Lee said.
Lee Valley says consumers shouldn't expect to receive some items until closer to next Christmas, never mind this one.
Lee pointed to one of the router bits his company carries. Normally, that part would take four months to arrive from a company in Taiwan where he's ordered from for years. He put an order in last week and said the expected delivery date is May 2022.
"A lot can happen between now and then. And if we get just a tiny little bit more demand, we could be out of stock for more than a year on that product."
He estimates problems with the supply chain may continue for another 12 to 18 months — but cautions that it's hard to tell.
"Consumers have to understand that even when COVID is over, it's not over," Lee said. "This ripple effect is going to continue for a very, very long time."
Ikea reports problems, too
Small firms like Lee Valley have been swept up, but even the big fish are having problems. Swedish furniture retailer Ikea says it also can't keep its shelves fully stocked right now.
Company CEO Jon Abrahamsson said the biggest challenge is getting goods out of China, where around a quarter of Ikea products are made. As a result, he expects consumers will face difficulties well into 2022.
Most of the chain's wares in Europe are made there, too, but more of what gets sold in North America comes from Asia, so the supply crunch is being felt most acutely in Canada and the U.S.
"On the retail side we have learned agility like never before because every day you have to work with what you have," Abrahamsson said. "You have to find ways to solve customer needs with limitations that we have never seen before."
With files from Reuters