Electrical goods stocks low for Christmas

1 December 2010
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1 December 2010 | Angeline Albert   

Retailers’ failure to invest in their inventories this year could see a shortage of top electrical goods such as games consoles and flat screen TVs this Christmas.

This is the warning from procurement consultancy BravoSolution, which said shortages are looming. Ongoing economic uncertainty led companies to hold on to cash reserves, and suppliers reduced inventory levels rather than have redundant stock and risk significant losses if products were left unsold.

Despite there being less than a month to go until Christmas day, lead times for electrical components have increased dramatically, hitting dangerously high levels of more than 50 days instead of the 10-12 day average. 

“Lead times were becoming a problem as early as March 2010,” said Paul Martyn, vice-president of global marketing at BravoSolution, because fears of a double-dip recession were setting in.

The company said the supply of electrical components, such as computer chips and touch screens, has been affected by inventory decline.

Martyn added: “Buyers should nail down lead times and build flexibility into contracts with suppliers to suit changes in economic conditions. If inventories remain at low levels, supply may not be able to catch up with demand until the first quarter of next year. This means quarterly results could be affected, which will impact on the profitability of manufacturers and retailers.”

A focus on toy supply chains will appear in the 9 December issue of SM


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