If you are planning on decorating your home for the holidays, everything from artificial Christmas trees to lights, decorative wreaths and rings, you may want to start early.
One of the nation’s largest artificial Christmas tree importers is warning of limited inventory as a result of trade war tariffs, and says this will be the case for the broader category of seasonal decorative items.
“We brought in about 25% less product,” Chris Butler, CEO of National Tree Company, tells CNBC. “We are definitely going to see a short supply this year. So if you’re a consumer and you are in the market for Christmas goods this year, I would definitely act now and get ahead of the curve.”
Butler said the peak for Christmas décor sales is Black Friday weekend.
“That’s when sales are at the absolute highest, but I would not wait for that weekend,” Butler said. “I would get ahead of that. So buy now, buy early is what I would say to consumers,” he added.
If consumers can find the products they want, prices are likely to be higher.
Butler said because of the trade war not only did the company bring in less inventory, but it also had to raise prices by 10% as a result of the tariffs.
“We are promoting our goods this year during Black Friday and Amazon’s Prime Big Deal day, but not as heavily as in years past,” he said. “I think most consumers will be able to weather the 10% price increase, but consumers at the lower end of the economic spectrum may struggle,” he added.
Butler, who leads the Christmas Trade Group, a 10-member organization representing over 1000 employees and generating over $1 billion in revenue each year, has met with both the Treasury Department and the U.S. Trade Office to discuss the situation.
“This is why we are having conversations with the [Trump] administration so we can potentially save Christmas going forward and give American consumers the low prices that we think they deserve,” he said.
The issues of availability and affordability as less product comes into the U.S. also come amid concerns about weaker consumer demand.
The latest warning comes just months after Eric Hoplin, president & CEO of the National Association of Wholesaler-Distributors, told CNBC there have been decreases as high as 60% in orders from brick-and-mortar retailers and local hardware stores.
ImportGenius data shows the drastic pullback in National Tree Company imports.
“Compared to prior years, the import volumes we can see in August and September for National Tree Company are strikingly low,” said William George, director of research for ImportGenius. “August volumes are down 58% year over year, and September is down over 70% compared to last year.”
George said October is the last major import month historically for National Tree Company. “This is another important month to track,” said George. “But a drop-off this significant during peak season months suggests low expectations for this Christmas retail season,” he said.
Typically, the company would consistently import products during the months of May through October, Butler said, but with the tariffs that changed.
“We are definitely going to be bringing in some products up into mid-November, which is very, very late for us, but again, the peak of the businesses is around the Thanksgiving weekend. So they will be in, in plenty of time to sell those goods, but definitely a little bit later than normal,” he said. The 25% decrease in product includes this inventory, he added.
The number of containers filled with replenishment goods on the water from Asia to the U.S. is lower compared to last year. According to trade tracker Vizion, 14 containers are arriving this week. Last year, 113 containers arrived during the same calendar week.
For the week of October 13, four containers are arriving. Last year, the company imported 204 containers during the same week timeframe. For the week of October 27, container volumes are closer: 44 containers are expected to arrive versus 48 the year prior.
“By looking at upcoming U.S. import arrivals for National Tree Company scheduled to arrive before December 1, it is clear that the volume of Christmas trees will pale in comparison to this same period from last year,” said Ben Tracy, vice president of Vizion. “We are seeing similar year-on-year declines in other holiday decoration items like lights, but based on size alone, the trees seem to be showing the most dramatic decline,” he added.Â
Looking at the company’s supply chain, Panjiva records 60% of National Tree’s imports come from China. Other countries of import include: Hong Kong (27%), Cambodia (3%), and other Asian countries including Vietnam and Indonesia.
Butler tells CNBC manufacturing in the U.S. or other countries is cost-prohibitive.
“Obviously, labor is more expensive in the U.S. We’ve done the math, and a tree made in the U.S. would probably be about two and a half to three times more expensive,” he said. “So we’re continuing to look at automation. We’re continuing to look at other things that we can do, whether it be nearshoring and other ways to mitigate, but at this point, it would be very expensive, and the economics just probably wouldn’t work,” he added.
