Delays in the supply chain, shortages affect purchasing

In the midst of the pandemic last year, Dana Friedman, owner of Meridian-Kessler Petite G Jewelers, realized that the cost of shipping a diamond to her customer in Colorado was going to be double the purchase price of a plane ticket and steal the diamond there herself. She resorted to improvisation, packing the diamond in her husband’s suitcase and sending him on a mission instead.

Supply chain delays, lack of inventory, and higher transportation costs have become a pervasive business reality for big box stores and small business owners, and Indiana is no exception.

Black Friday shopping – and shopping in general – has changed in two key ways, experts say. Not only may buyers have a harder time finding the exact item they want, the end cost of the product they find is likely to be higher.

Dana Friedman assists a client of Petite G Jewelers on Thursday, November 18, 2021 in Indianapolis.  Friedman, owner of the luxury jewelry store in the Meridian-Kessler neighborhood, has witnessed firsthand the effects of the global diamond shortage.  Diamond prices have gone up 15-20%, she said, so they had to increase their jewelry prices.

“I would advise people shopping for Black Friday that if they find what they want, buy it now,” said Amrou Awaysheh, a professor at the Kelley School of Business at Indiana University. “It’s not apocalyptic, but it’s less items but with fewer selections… If you can’t find the specific color or configuration of the items you want, understand that there is a very low probability that this item will be available before the end of the holidays. “

Delays in the supply chain could hit Indiana particularly hard.

A state heavily dependent on the manufacturing and logistics industry for jobs and production, Indiana has been plagued by upstream supply chain delays, including bottlenecks at ports across the country, a said Awaysheh. According to data from the Bureau of Economic Analysis and the United States Census Bureau, up to 26% of Indiana state’s production in 2019 was from manufacturing.

When there are delays in other links in the supply chain, more factories sit idle, inventory levels are lower and deliveries of consumer products are delayed, Awaysheh explained.

“The only thing that really has an impact in Indiana is (the fact that) we are at the crossroads of America,” he said. “We are not immune to any of the supply chain issues that are happening across the country,”

When the pandemic first struck last year, global production slowed amid record consumer spending, said Mark Frohlich, director of the Center for Excellence in Manufacturing at the IU Kelley School of Business in Indianapolis. . As more people get vaccinated and global economies open up, demand is growing faster than factories, container ships, trucking lines and other parts of the supply chain. can follow.

Supply chain disruptions and their impact on buyers in Indiana reveal how global our economy is, Frohlich said.

“I think it hurts Indiana right now,” he said. “It’s hard to think of a product that doesn’t have a global supply chain. Most of the products that the state now specializes in – medical devices, automotive and aerospace, and pharmaceuticals – you get ingredients from other parts of the world, from raw materials.

According to Awaysheh, forecasts for the end of supply chain disruptions range from mid to late 2022.

Previous promotions. A wave online

The National Retail Federation expects nearly 2 million more people to buy this Thanksgiving Day through Cyber ​​Monday than last year. Each year, the Federation, the largest trade organization of retailers, polls Americans about their holiday shopping habits.

This year’s annual survey, released last week by NRF and Prosper Insights & Analytics, found that 66% of shoppers – about 158.3 million people – plan to shop on Thanksgiving weekend, up by compared to last year but below pre-pandemic levels.

On Black Friday, about 64% of shoppers plan to shop in-store, up from 60% last year when concerns over COVID-19 persisted. And the NRF also found that while shoppers expected to shop on Thanksgiving weekend, many had already started.

“Black Friday stopped being a one-day event years ago, and this year some consumers started shopping for Christmas as early as Halloween,” said NRF President and CEO, Matthew Shay, in a press release.

This year, retailers such as Target and Amazon.com started offering deals on toys, sports equipment, kitchen gadgets and other items as early as October, citing supply chain challenges.

As in previous years, surveyed consumers leaned heavily on online shopping, with 57% saying they intended to buy gifts online this year. Last year 60% said so.

Radial, a third-party distribution center for retailers, based in Pennsylvania, began hiring over the holidays in October to support the increase in online orders. The company, which operates a facility in Brownsburg, was looking to fill approximately 2,500 seasonal jobs at the Brownsburg facility where workers pick, sort, pack and ship orders for clothing stores such as The Children’s Place.

Seeking to hire in a tight labor market, the company offersbase wages between $ 17 and $ 18 an hour, plus a double rate for overtime during the weeks with the highest volume. It needs around 30% more workers than in the past, said Melissa Annelear, a senior manager who works closely with the Brownsburg site.

“We are very close to our goal. We need to hire 350 more before Black Friday, but we’re really happy with our ability to attract labor this year to this market, ”Annelear said.

Online orders for stores like The Children’s Place are processed through Radial’s order management system and sent to the Brownsburg distribution center, where inventory is stored on site. Orders are then picked, packaged and shipped.

The pandemic has helped accelerate the growth of e-commerce sales, which had risen sharply in recent years. Over the past year, many shoppers stayed out of stores, opting for online or curbside pickup to avoid the crowds. Radial said it saw a 17.7% year-over-year increase from 2019 to 2020 in units shipped.

And, despite supply chain challenges expected to slow the movement of merchandise and slow vacation shipments, Radial forecast a further increase in online vacation orders.

“With the pandemic, people have learned to shop online,” Annelear said. “It has become a habit that people have really adopted again.”

Major brands are getting ready for the holidays

Supermarket companies have said they are doing their best to avoid supply chain disruptions in the coming weeks.

Target released a press release last month in which the company said it has made major investments in supply chain operations, including adding two new distribution centers this year and four new sorting centers to organize the products by delivery route. Target also plans to hire more than 30,000 supply chain team members year round to strengthen the team.

Target’s imports represent less than 3% of container volume in the United States, the statement said. The company said it was helping alleviate congestion at the nation’s largest ports in Los Angeles and Long Beach by moving at least 50% of its containers overnight to help clean up ports and help the supply chain. to operate efficiently.

A third-party logistics provider, Radial said it has worked closely with retail customers and transportation partners to provide volume forecasts and capacity plans. Radial senior manager Annelear said the company had worked with customers to adjust forecasts for items shipped from overseas during peak sales.

“Our customers have been fortunate to have bought early enough that the right inventory was there for their maximum sales,” she said. “We saw the volume coming in later than expected, but it seems to be coming in time for holiday sales.”

Petite G Jewelers is a local luxury jewelry store located in the Meridian-Kessler neighborhood of Indianapolis, viewed Thursday, November 18, 2021.

Diamond supply is polished

Baby and toddler products were the category where items were most often out of stock for online sales in February of this year, according to the latest data from the Adobe Digital Economy Index, which analyzed 100 million digital product sales to identify trends. The next two most sold out items were groceries and jewelry.

“One of the biggest shortages right now for the holidays is jewelry,” Frohlich said. “This is because last year, in countries like Russia and China, Australia, parts of Africa and others where rough diamonds come from, because of COVID, they had to slow down or stop their operations, to protect people. “

Petite G Jewelers owner Friedman has witnessed firsthand the effects of the global diamond shortage.

Diamond prices have gone up 15 to 20 percent, she said, so the store has raised prices for jewelry. Even then, her store’s profit margins tightened, she said, declining to say by how much.

Lisa Nik, a Los Angeles-based jewelry designer, helps clients Joyce Peipert and Jennifer Hendrian on Thursday, November 18, 2021, during a trunk show at Petite G Jewelers in the Meridian-Kessler neighborhood of Indianapolis.

Due to the price hike, Friedman said more of his customers – about a fifth – are now asking for lab-grown diamonds, which mimic the real thing for about half the price, instead of “dirt” or “dirt” diamonds. excerpts.

Still, demand seems to have only increased, especially for what Friedman calls “staple jewelry,” pieces like the tennis bracelets his customers wear every day.

Friedman suspects that the increase in demand for jewelry is due to the fact that consumers of luxury goods are now spending money they would otherwise have spent on travel and cruises to improve their diamonds.

Last year, Petite G Jewelers had their biggest sales year since opening in 2016 and Friedman said they were on track to do better. up to 20% in 2021.

Its goal is to break even this year.

Contact IndyStar reporter Ko Lyn Cheang at kcheang@indystar.com or 317-903-7071. Follow her on Twitter: @kolyn_cheang.Contact IndyStar reporter Alexandria Burris at aburris@gannett.com or call 317-617-2690. Follow her on Twitter: @allyburris.

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