From artificial Christmas trees to lights to decorative garlands and rings, if you’re planning on decorating your home for the holidays, you’d better start early.
One of the country’s largest importers of artificial Christmas trees has warned of limited inventory due to trade war tariffs, which it says will apply to the broader seasonal decoration category.
“We introduced about 25% less product,” National Tree Company CEO Chris Butler told CNBC. “There is definitely going to be a shortage this year. So if you’re a consumer and you’re in the market for Christmas supplies this year, I would definitely act now and be proactive.”
Butler said sales of Christmas decorations peak during Black Friday weekend.
“That’s when sales are the highest, but I don’t want to wait until the end of the week,” Butler said. “I want to be ahead of that. So what I would say to consumers is buy now, buy early,” he added.
If consumers can find the product they want, prices can go up.
Butler said the trade war has not only reduced the company’s inventory, but it has also had to raise prices by 10% due to tariffs.
“This year we’re promoting our products on Black Friday and Amazon’s Prime Big Deals, but not as heavily as we have in years past,” he said. “I think most consumers will be able to weather a 10% price increase, but consumers at the lower end of the economy may struggle,” he added.
Butler, who heads the Christmas Trade Group, a 10-member organization that represents more than 1,000 employees and generates more than $1 billion in revenue each year, has met with both the Treasury Department and the U.S. Trade Bureau to discuss the situation.
“That’s why we’re in discussions with the (Trump) administration to help save Christmases in the future and provide the lower prices that we think American consumers deserve,” he said.
Amid concerns about weak consumer demand, availability and affordability issues have also arisen as fewer products come into the United States.
This latest warning comes months after Eric Hoplin, president and CEO of the National Wholesale Dealers Association, told CNBC that orders from brick-and-mortar retailers and local hardware stores are down by up to 60%.
ImportGenius data shows a significant pullback in National Tree Company imports.
“Compared to previous years, National Tree Company’s import volumes for August and September are surprisingly low,” said William George, research director at Import Genius. “Sales volume in August was down 58% year-on-year, and in September it was down more than 70% year-on-year.”
George said October is historically the last major import month for National Tree Company. “This is another important month to track,” George said. “However, such a large drop during the busy months suggests that expectations for this year’s Christmas retail season are low,” he said.
Butler said the company typically imported products consistently from May to October, but the tariffs changed.
“Some products will definitely be arriving by mid-November, which is very slow for us, but again, our peak business is around Thanksgiving weekend. So they’ll arrive in plenty of time to sell those items, but definitely a little later than normal,” he said. This inventory is included in the 25% decline in products, he added.
The number of containers full of supplies at sea heading from Asia to the United States is down compared to last year. Trade tracking firm Vizion says 14 containers are expected to arrive this week. Last year, 113 containers arrived in the same calendar week.
Four containers will arrive the week of October 13th. Last year, the company imported 204 containers in the same week. Container volumes are down for the week of October 27, with 44 containers expected to arrive compared to 48 a year ago.
“If you look at the National Tree Company’s upcoming imports into the U.S. through Dec. 1, it’s clear that the volume of Christmas trees pales in comparison to the same period last year,” said Ben Tracy, Vizion vice president. “Other Christmas decoration items such as lights have seen similar year-over-year declines, but when looking only at size, trees appear to have shown the most dramatic decline,” he added.
Looking at the company’s supply chain, Panjiva records that 60% of National Tree’s imports come from China. Other importing countries include Hong Kong (27%), Cambodia (3%), and other Asian countries including Vietnam and Indonesia.
Butler told CNBC that manufacturing in the U.S. and other countries is prohibitively expensive.
“Obviously, labor costs are higher in the United States. Our calculations show that wood made in the United States is probably about two and a half to three times more expensive,” he said. “So we continue to look at automation. We continue to look at other things we can do, like nearshoring and other mitigation methods, but at this point it would be very expensive and not economically viable,” he added.
