Could COVID-Related Factory Closures Affect Christmas Shopping?

Despite lockdowns being lifted and a small degree of normality resuming across the land, the COVID-19 pandemic rolls on and its impact is still being felt in a big way. With Nike, adidas and PUMA all reporting major production issues, could there be problems for Christmas?

While we all look forward to the fun and festivities that Christmas brings, word from the three major sporting brands is that we should be looking to get our Christmas shopping done early. Factory closures in COVID-hit Vietnam along with supply chain bottlenecks are expected to continue to affect business for Nike, adidas and PUMA into next year, so if you’re not already, then you need to get ordering now to make sure little Timmy isn’t disappointed on Christmas morn…

So why’s this happening? Simple answer is COVID. It’s an easy one to blame anything that goes wrong on, but in this case it is legit. Factory closures in Vietnam from July to September and a gradual re-opening since October meant adidas, for example, had lost capacity for 100 million items in the second half of 2021. That was exacerbated by delays to container shipping at both origin and destination ports, with a third of shipments leaving Asia with significant delays.

Back in September, Nike already forecasted trouble ahead, saying it expected delays during the holiday shopping season, blaming a supply chain crunch that has left it with soaring freight costs and products stuck in transit. These were sentiments that were echoed by PUMA, who advised people to shop early for Christmas as those pesky supply bottlenecks and manufacturing disruptions would mean a shortage of its products well into 2022.

"If you want to buy Christmas presents, you should buy now," PUMA Chief Executive Bjorn Gulden said, adding that supply chain issues, compounded by higher costs of raw materials, could feed through to higher prices in the second half of 2022. Yep, the bad news just keeps on coming.

Transit times are now almost twice as long as pre-pandemic levels across North America, Europe, the Middle East and Africa. Since it normally takes three months for products to go from factory floor to retail shelves the lack of shoes and apparel made during that time hasn’t hit the market yet, and will only do so this quarter and the next.

But on the bright side, all the factories these brands rely on in south Vietnam are now back open, and for PUMA they are operating about 70 percent of capacity on the apparel side and 60 percent for footwear. Gulden expects the plants to be running at full speed within weeks.

So the moral of this Christmas tale? As the Ghost of Christmas Future (Gulden) said, get your shopping done early to avoid disappointment...