The 2021 guide to holiday shopping in a season of shortages

This isn't the year to hold out for Black Friday or Cyber Monday deals on hot-selling gifts.

Experts are warning holiday shoppers to purchase high-demand products now rather than waiting until the holiday season, when they'll likely be off the shelves.

Global inventory shortages, prolonged shipping delays, and other pandemic-led manufacturing challenges have crimped supply chains, particularly for some of the world's most ubiquitous materials and components.

Dave Hermansen, the chief executive of StoreCoach, which operates more than a dozen e-commerce sites, says to expect the following four key shortages:

1. Steel, which has tripled in cost and led U.S. providers to seek foreign sources.
2. Shipping containers, beset by massive pileups of empty containers in the U.S. and skyrocketing international demand.
3. Microchips. Components and circuit boards typically take 30 to 45 days to source. Now they're taking as long as a year.
4. Just-in-time Inventory, typically acquired within 45 days, is now taking several months, extending lead and fulfillment time while upending re-ordering estimates.

Here's a breakdown of how common holiday spending categories are affected by the shortages and how to get around them.

Toy stories and other manufacturing woes

Toy and clothing manufacturers have been sounding the alarm for months.

Mattel Inc. in July alerted analysts of its supply disruptions in Asia fueled by pandemic-led port and plant closures, which have exacerbated shipping container shortages. The El Segundo, Calif.-based company also warned of potential price hikes on popular brands such as Barbies, Hot Wheels, Fisher-Price, and American Girl.

Another flurry of warnings came in August.

In an earnings call, Nike warned of continued short-term inventory shortages as many of its factories in Vietnam were shuttered by the government in an effort to suppress coronavirus outbreaks, prompting the company to lower revenue targets.

The chief executive of H&M (Hennes & Mauritz AB) told Bloomberg it couldn't meet customer demand this holiday shopping season as it grapples with shipping and production delays in Asia, where it sources most if its materials.

And MGA Entertainment's chief executive told CNN Business he expects “a major shortage" of toy products this year. Several brands from the toymaker could be affected, including Little Tikes, Rainbow High dolls, Bratz dolls and LOL Surprise!, one of the top-selling toy lines in the world.

Taylor Adnan of Rad Sourcing, which helps businesses establish and manage ethical production overseas, expects manufacturers to prioritize supply chains for their money makers.

“Toy companies will make sure they are producing their top sellers and focus less on niche and seasonal toys," Adnan says. “Because of this there will be less availability for those select products despite there being more demand during the holiday season."

Don't wait and buy late

Restocking will be an issue this year, so consumers should be prepared to make earlier purchases on coveted items, retail expert Ted Rossman warns.

“If you see something you like, you should grab it," the senior industry analyst at CreditCards.com says. “There's a lead time of several months on many items, so if a hot toy or clothing item sells out, it won't be easy for retailers to replace it prior to Christmas."

That message is resonating, as half the nation's gift givers plan to start holiday shopping by Halloween, according to a recent CreditCards.com poll of more than 2,400 adults.

New challenges on the home front

For those contemplating home renovations or appliance upgrades, buyer beware.

While some raw material costs have steadied, sourcing components like steel and microchips remain difficult, creating more supply chain gridlock.

“There will continue to be significant delays in new appliances, especially kitchen appliances like dishwashers and fridges," Arnold Long, the general operations manager at Mr. Blue Plumbing, says.

He recommends looking for used or open-box products to avoid delays, some expected well into next year.

Widespread domestic food shortages aren't expected this year, although imports on cheese, meats, and other items will likely face some shipping delays. Supply concerns have crept up on a few items—namely turkeys—as farms struggle to meet demand. Apples, pumpkins, and cranberries are also in somewhat short supply, mostly due to droughts and labor shortages in the Midwest.

Get in early on handmade & custom

Marissa Likar, owner of Dogwood Hill Embroidery, says some craft stores are already running low on popular products, including custom sweatshirts and caps, basic crafting supplies, and unique yarns.

“If you are planning on making a knitted or sewn gift, plan ahead and get all your materials when you see them," she advises.

Jennifer Beale's handmade products company has faced supply chain disruptions on both sides of the Pacific. Stateside, warehouse closures, worker shortages, and problems at the Port of Long Beach, California, which recently delayed a shipment by two months, have depressed sales and her holiday outlook.

Meanwhile, suppliers in China have been beset by warehouse closures and electricity shortages.

“We may not be able to make the amount of holiday gifts we normally make and sell," says the Air Force veteran and proprietor of PaisleyGroveGIFTS.com, which sells many personalized ornaments and home decor gifts during the holiday season. “We've lost precious manufacturing time."