Euronics Stockpiling Early for Christmas
Christmas this year may be merrier than 12 months ago when many were separated from their families due to the pandemic. Yet, it is also likely to be less generous as supply chain disruptions make it harder to buy presents. Traditionally, the run-up to Christmas and Black Friday (increasingly morphing into Black Week) are the busiest periods for retailers and the most lucrative.
“We generate roughly a third of our revenues between Black Friday and Christmas,” Bálint Fazekas, head of sales at Euronics, tells the Budapest Business Journal. November is primarily about online shopping, gradually transitioning to offline through December. The pandemic slightly changed that dynamic, though; last year, Euronics saw a 40% increase online, which had slowed down to 20% by 2021.
The increase is not unique: since the coronavirus outbreak, online traffic at webshops in Hungary rose by 43% on average, according to a survey by Shoprenter.
This spike in demand following the relaxation in restrictions and the ensuing shortage of parts and products has caused problems in the supply chain and thus delays in shipping. As a result, some bestselling products won’t be available this Christmas, or only in limited stock.
Black Friday and Christmas are tied in that many people try to buy Christmas presents in November. Therefore, ever more retailers, including Euronics, have decided to extend this period so as not to overburden the system.
“We usually ship products within 1-3 days of ordering; we have the stocks in physical shops and warehouses,” Fazekas explains. The chain has 40,000 square meters of warehouse capacity.
To avoid shortages, it starts to stockpile goods in the quarter before these busy periods and even, in the case of big white household appliances, half a year earlier.
“This year, we started preparations much earlier and accumulated stocks to the maximum. We are confident that we are not going to face any shortages; we have reliable partners and store inventories are 25% larger
than they were a year ago,” Fazekas says. He adds that the retailer will need to increase warehouse space in line with increasing online shopping demand.
Online and bricks and mortar shops follow different strategies. The online assortment is extensive, but the inventory is limited, while shops feature fewer products in larger stocks. Delays in supply chains affect everything, including prices. Heightened demand paired with low stocks plus rising inflation leads to higher prices.
“We saw the biggest increase in the price of televisions,” Fazekas explains. But he says Euronics has not increased its prices. “Our profit margins will be lower, but we decided against a price hike.”
Even so, there will be products that will be less readily available. The company will try to counter potential shortages by offering similar goods.
Due to delays in international shipping, there will be a temporary shortage of the most popular mobile phones and IT products, eMag and Extreme Digital says. Following the completion of the merger between the two, eMag and Extreme Digital hosted a joint Black Friday for the first time this year which took place entirely on the eMAG platform.
The group said it expects about 30% of this year’s Black Friday orders requested at eMAG to be collected from easybox vending machines available at nearly 420 locations
nationwide. With the number of infections increasing, contactless pick-up is becoming more prevalent. Products ordered on Black Friday will be shipped by eMAG within a maximum of 14 days from Dec. 3, 2021.
The retailer notes that the situation may have improved compared to last year, but there are still minimal stocks of PlayStation 5 and Xbox Series X consoles available. If you want such a set, it is worth booking it, as subscribers will be notified when they become available, the group advises.
“The global chip shortage is a real phenomenon; its effects can be felt here as well. Fortunately, as the largest player in the Hungarian market, we are fairly on the top of the manufacturers’ list so that we can order quite large quantities. We don’t expect a general product shortage this season, at most a temporary unavailability of a single model,” eMag and Extreme Digital write.
The shortage of video cards is already tangible and is gradually spiraling into laptops with better graphics units.
“Video cards are almost impossible to get hold of, and if even we do, retailers will charge two or three times the normal price,” refurbished IT products company Furbify quotes computer expert Péter Tóth as saying. “The shortage in the segment is so severe thanks in part to the cryptocurrency miners; they would buy the cards no matter the price,” he adds.
The same is true in the console market, the demand is enormous, and customers have to wait months to get a gaming machine. Due to the lack of inventory, the price increase is spiraling into the notebook market as well, the expert warns.
This article was first published in the Budapest Business Journal print issue of December 3, 2021.
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