: Shop early and expect to pay more: Supply chain issues could be a stumbling block to upbeat holiday shopping forecasts

Shoppers are preparing to spend to celebrate the holidays, but whether they can find what they’re looking for has yet to be seen.

Holiday retail sales forecasts have started rolling in with Deloitte expecting sales to grow 7% to 9% from a year ago, reaching between $1.28 trillion and $1.30 trillion. Mastercard SpendingPulse

is forecasting a 7.4% rise for the season, excluding autos and gas.

But looming above the holiday shopping joy is the specter of all the supply chain challenges that could dampen sales.

Many of the hurdles can be traced back to the COVID-19 pandemic, which has caused supply chain problems across everything from clothing to shoes to food for 20-plus months.

Read: General Mills will raise consumer prices, and McCormick might, too

More recently, COVID outbreaks in Vietnam have shut down factories. BTIG analysts said this week that Nike Inc.

could lose production of as many as 160 million pairs of shoes through spring 2022, with an estimated 80 million shoes already going unproduced.

See: Nike could lose production of 160 million pairs of shoes due to COVID-related facility closures in Vietnam, according to BTIG

RH has pushed back the launch of the RH Contemporary collection and the fall catalog.

And companies like Yeti Inc.
makers of high-end coolers and other outdoor gear, and Foot Locker Inc.
have said the shutdown has had an affect.

“[W]e believe footwear has been more affected than apparel due to (1) greater complexity inherent in footwear production (i.e., molds, lasts, machines) making it more difficult to shift that production to other factories/countries quickly, (2) substantially more factory workers are needed to make a pair of shoes than a shirt, and (3) factories in other countries are at full capacity with no extra line space to absorb incremental demand,” wrote BTIG in a note published earlier this week.

Some companies, like Lululemon Athletica Inc.

and Build-A-Bear Workshop Inc.
have been able to find ways to work around some issues.

Also: Lululemon maintains its flow with shares hitting a record despite supply chain challenges

“Some of this potential disruption was predicted. Where we could, we pulled forward some orders,” Sharon Price, chief executive of Build-A-Bear told MarketWatch after the company reported its second-quarter earnings at the end of August.

But these companies might be outliers. As early as July, analysts were anticipating issues with getting toys to customers in time for Christmas.

Manufacturing in one country isn’t the only problem. Ships have run aground or been stalled at the ports. Coresight Research quotes data this week showing a bottleneck on the West coast with 44 ships anchored at Los Angeles and Long Beach, Calif. ports at the end of August.

And resources and workers necessary for moving merchandise, like drivers and containers, have been in short supply and very expensive.

Dollar Tree Inc.

said, during its most earnings announcement in August that one of its supply ships was delayed for two months because a crew member tested positive for COVID, resulting in higher prices.

“[W]e are now projecting that our regular carriers will fulfill only 60% to 65% of their commitments and their spot market rates will be much higher than previously estimated,” said Dollar Tree Chief Executive Michael Witynski on the earnings call, according to a FactSet transcript.

And: Dollar Tree says one of its ships was delayed two months after a crew member tested positive for COVID

Even with these myriad troubles, experts are optimistic about the upcoming holiday season.

“The consumer has continued to be resilient and recent price increases brought on by constraints in the supply chain have not dampened the robust demand seen during the past year,” said Jack Kleinhenz, the National Retail Federation’s chief economist, in a recent report.

Mastercard SpendingPulse says retailers have learned a lot over the past couple of years and will put that to use in the coming months.

“This holiday season will be defined by early shopping, bigger price tags and digital experiences,” said Steve Sadove, senior advisor for Mastercard, in a statement.

Don’t miss: Surge in U.S. consumer prices slows in August, CPI shows. Has inflation peaked?

Retailers and other organizations are gearing up with seasonal hiring announcements from Dick’s Sporting Goods Inc.
the U.S. Postal Service and 125,000 logistics hires expected at e-commerce giant Amazon.com Inc.

announced on Tuesday, among others.

“While consumer concerns about health and safety have eased since the last holiday season, pandemic-influenced shopping behaviors continue to gain traction,” said Rod Sides, vice chairman of Deloitte LLP and U.S. retail and distribution sector leader, in a statement.

“Retailers who remain resilient to shifting consumer behaviors and offer convenient options for online and in-store shopping, as well as order fulfillment, will be poised for growth this holiday season, and into the new year.”

The SPDR S&P Retail ETF

has soared 43% for the year to date. The Amplify Online Retail ETF

has slipped 0.5%. And the benchmark S&P 500 index

has gained 18.7% for the period.

This post was originally published on Market Watch

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