Shoppers are being urged to start their Christmas shopping right now, with huge shipping delays and shortages of popular products expected.
As thousands of essential workers in New South Wales and Victoria self-isolate amid surging Delta outbreaks, distribution centres are failing to keep up with demand – forcing Australia Post to suspend parcel collection.
Meanwhile, retailers are also struggling to get products into Australia as Delta causes new delays in international supply chains.
It’s a “perfect storm” of problems that has retailers worried Christmas will be disappointing for many shoppers, with product shortages expected.
Dean Salakas, chief executive of NSW-based retailer The Party People, warns the parcel delays hitting Australia Post will likely only worsen heading into Christmas, particularly as COVID-19 cases continue rising.
“We’re going to have some big problems,” Mr Salakas told TND.
“People who have been looking forward to specific things won’t have access to it – it’s going to be disappointing.”
Paul Zahra, chief executive of the Australian Retailers Association, said Australia Post was already facing “Christmas levels” of demand.
“This is unprecedented trading,” he told The New Daily.
“We also have distribution centres in NSW which are in LGA [local government area] hot spots, which are impacted as well,” Mr Zahra said.
“It’s the perfect storm.”
Lockdowns in NSW and Victoria have delivered another surge in online shopping, with e-commerce sales hitting record levels in July.
Australian Bureau of Statistics data published on Friday found online shopping rose 19.3 per cent over the month to $3.7 billion – the largest increase since April last year.
BIS Oxford economist Sarah Hunter said the demand would only intensify heading into Christmas, with online shopping set to hit even greater heights.
“The sector is having to adjust really quickly,” Dr Hunter told TND.
“If we’re still subject to significant restrictions … you’ll have to expect there will be an elevated level of e-commerce [during Christmas].”
Delivery issues set to get worse
Australia Post is already struggling to keep up.
On Wednesday, the government-owned postal service took an extraordinary step and suspended parcel collections over the coming weekend to clear a backlog of deliveries out of its warehouses.
About 500 Australia Post workers are currently self-isolating because of COVID-19, adding additional strain to the organisation’s supply chains.
In a letter to retailers seen by The New Daily, Australia Post said worker safety was its “top priority”.
“This [Delta outbreak] is putting increased pressure on our network like nothing we have experienced before,” Australia Post executive Gary Starr said.
“We sincerely apologise for the inconvenience this may place on you and your customers.”
Mr Zahra, a former chief executive at department store David Jones, said the challenges causing the delays would “compound” by Christmas.
“Consumers need to prepare for delays in items they’re purchasing online and in store,” he said.
“You can’t leave your Christmas shopping until the last minute.”
Australia Post said on Friday that August is already the “busiest month” in history, with volumes 20 per cent higher than last December.
“We’ll be hiring an extra 4000 team members in both metro and regional areas to help keep things moving throughout peak and prepare for another busy Christmas,” a spokesperson said in a statement to TND.
“Border closures, reduced flights and compliance with COVID-safe restrictions do create challenges.
“While our posties and delivery drivers will continue to deliver as quickly and safely as they can, some delivery delays may be experienced.”
Shoppers must be ‘flexible’
Consumers need to be “flexible” Mr Zahra said, and realise that retailers from small businesses to large supermarkets like Woolworths will be affected.
Woolworths chief executive Brad Banducci revealed last week that 3300 essential workers were self-isolating with COVID-19, a problem that has created stock shortages at some stores listed at exposure sites.
At one Woolworths outlet in Melbourne’s north, signs are posted across the deli section saying that “due to the current trading environment” fresh meats and chicken are not available for sale at the store.
Mr Zahra is not concerned about food shortages over Christmas, despite reports that Coles and Woolworths are struggling with stock levels.
But he said shoppers need to be prepared to accept product substitutes.
“If you want a specific brand of ham you may have to settle for a different brand,” Mr Zahra said.
“The supply chains have been understandably disrupted.”
Month-long shipping delays
Mr Salakas said local delays are just part of the problem for retailers.
Global supply chain issues are becoming so bad that some of his Halloween products aren’t going to be delivered until December, he said.
“Christmas is in the same boat,” Mr Salakas said.
“Ports are choked, air freight is choked – people can’t get stock in.”
Delta outbreaks overseas are slamming global supply chains, making it difficult for retailers to import goods into Australia ahead of Christmas.
It’s affecting large retailers too, with recent warnings from Super Retail Group, Woolworths, and Kmart-owner Wesfarmers about shortages.
Mr Salakas said there are no good answers right now and that shoppers will need to be patient with retailers facing unprecedented problems.
“We’re wearing these costs,” he said. “We’re going to see people going out of business.”