The scariest part of Halloween: supply chains
Halloween. The holiday that haunts supply chains.
Businesses that sell, say, Halloween costumes, candy or decor have to make decisions 18 months to two years in advance, said Julie Niederhoff, associate professor at Syracuse University’s Whitman School of Management.
What costumes and decorations and candy to make or procure, how much of them, what raw materials you might need, how and when to ship them over?
“Best-case scenario, it has to be six to eight months in advance,” she said. The problem is that Halloween is driven by trends — you don’t always know what people are going to want to dress up as that far in advance.
2021 was a perfect example, Niederhoff said. “Squid Game” came out just a month and a half before Halloween.
“Everybody wanted ‘Squid Game’ costumes and ‘Squid Game’ designs, but that was not on anyone’s production planning six months earlier,” Niederhoff said. “So there was a really big mismatch between what consumers were looking for and what was available, and the supply chain just couldn’t work fast enough.”
This year, it appears that retailers were making decisions extra-early. Businesses started sourcing Halloween costumes and decor about a month earlier than last year, and they’ve been sourcing such items earlier and earlier since 2019, according to search data from digital manufacturing marketplace Xometry.
“People were haunted by the lessons they saw — COVID, now you’re seeing more problems related to climate change and extreme weather that’s also disrupting supply chains right here in the United States. So I think with all that on their mind, people are creating resilience,” said Xometry CEO Randy Altschuler.
The emphasis on resilience tracks with survey data from McKinsey, where Mike Doheny is a senior partner. “Those challenges are still raw enough for companies to have maintained their focus,” said Doheny.
According to S&P Global, Halloween products were shipped earlier this year too — by about a month.
That’s partly because shipping times are still not back to prepandemic levels. “We keep thinking we’re done with it,” Niederhoff said.
While the cost of shipping containers has come down substantially, “the containers being stuck is a big mishmash of problems,” she added. “It’s influenced by the Russian-Ukrainian war, it’s influenced by weather factors and labor strikes in different parts of the world and it’s one of those things that’s like a traffic jam. What looks like a relatively small construction zone in a very heavily used highway will turn into an enormous backup. Even a small glitch can create weeks of backup at a port or across a channel.”
According to shipping logistics company Flexport, ocean congestion is better than 2021 but still far above prepandemic levels. And there were new worries this year.
Chris Tang, a professor at the Anderson School of Management of the University of California, Los Angeles, said companies were also concerned with potential strikes. “Of truck drivers or the railroads or the ports, so therefore a lot of companies would like to play it safe. They try to place the order earlier.”
Tang said some of the sourcing of Halloween costumes may be different this year as well.
“Although most Halloween accessories and costumes are still made in China, some of them will be from Mexico,” Tang said, which reflects the trend of nearshoring manufacturing. The share of companies pursuing nearshoring of production nearly tripled this year, according to McKinsey’s Pulse survey.
All in all, businesses may be rewarded for their resilience. Consumers are expected to spend a record $12.2 billion on Halloween this year, according to the National Retail Federation.
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