Black Friday deals? If you didn’t shop early there is good reason to wait

Black Friday, the day after Thanksgiving, marks the traditional start of the holiday shopping season. But in a year of pervasive supply chain disruptions, we can expect to see higher prices, more competition for hot items, and probably a lot of late bargains. So, my shopping advice is kind of mixed, but keep some of that holiday shopping budget available for late arriving merchandise or sales.

If you shop at many of the big box retailers, you will probably find lots of goods available, although the product selection on display in stores may cover up some shortages. On recent earnings calls, retailers like Walmart and Target claimed they are well stocked with lots of inventory in spite of the bottlenecks in the ports and logistics networks. These companies have the resources to get ahead of curve on supply chain problems — they have people on the ground working with Asian suppliers and logistics providers every day.

I interviewed the Director of Global Logistics for Walmart back in October of 2020, which was well before the current supply chain crisis really hit hard. Even then his team was working through immediate problems and trying to get ahead of others. I couldn’t even make it through the interview without him having to take urgent interruptions. But that was emblematic of how firms with an intense focus on logistics could see the troubles coming, develop workarounds like chartering their own ships, and stay ahead of them.

No doubt these retailers will probably have to pass on some of their higher costs, but they also have the power to share the pain with suppliers. In their most recent earnings call, Walmart CFO Brett Biggs commented that their gross margin rate declined partly due to increased supply chain costs, and that they had higher wage costs in the midst of a holiday hiring program in which they added 200,000 store and supply chain workers. CEO Doug McMillon added that their cost inflation was higher than their retail (price) inflation, so they have a balance to strike. Bottom line: lots of merchandise available, some higher prices, but selection may depend on which of their suppliers could or could not deliver.

Amazon will do well, especially thanks to its Amazon Marketplace. It will be an easy place for consumers to scour, and by its nature the merchants who sell there — those who have the goods will thrive, and those who don’t will simply disappear. But Amazon is all about market pricing, so if you want some item badly and it’s in short supply, expect to pay. For goods sold by Amazon itself, the company has tremendous buying power because it commands such a large share of some categories. Bottom line: any easy choice for consumers, but don’t forget to compare with the growing omnichannel efforts of others like the Walmart marketplace, which operates on a similar model.

The real struggles this year will be among smaller merchants and product manufacturers, many of whom will face an extremely challenging season. Many are struggling to get their merchandise through congested ports, and they don’t have the negotiating power to meet sharply increased transportation costs. When their cargo gets stuck at a port or intermodal terminal, or they get charged demurrage fees because their trucker couldn’t get in to pick up their container, they don’t have a lot of alternatives to eating the cost.

For small local retailers, this is a critical selling season. Bottom line: if ever there was a time to support small local merchants, this would be a great time to patronize them, be flexible in what you are willing to buy —and maybe even buy gift cards so when their goods eventually make it to their stores, you can come back and buy from them.

Which brings me to my next point. We are seeing a lot of reports about the record number of container ships stuck off the coast of California (over 90 in recent weeks). They used to all be anchored in San Pedro Bay, but now the Ports of Los Angeles and Long Beach have pushed them farther offshore to reduce pollution and congestion. Eventually, all of those containers, many filled with holiday season merchandise, will make it ashore and into distribution centers and stores. The hopes among merchants no doubt is that a lot of it will make it into stores before the holiday shopping season winds down, but inevitably a lot of it will not. Many items still have to make it by train or truck to the Midwest or East Coast.

Late arriving goods will be a problem for retailers — but an opportunity for shoppers. This suggests that there will be a lot of availability right before Christmas, and probably even more in January. So contrary to the advice of many (who have an interest in getting you to shop early and therefore often), if you can be flexible and like good deals, my contrarian advice is not to spend it all today. There might be some great late-breaking sales down the road.

Willy C. Shih is the Robert and Jane Cizik professor of management practice at the Harvard Business School. His research focuses on global manufacturing and supply chains. Follow him on Twitter: @WillyShih_atHBS