For home entertainment distributors and retailers, this holiday season is shaping up to be a perfect storm of supply and demand.
Restrictions and health guidance pertaining to the pandemic have confined many people to their homes, leading to greater demand for home experiences, and over the last several months, the pandemic has strained the manufacturing supply chain for all those parts that come from China.
When you add new product launches into the equation, such as the PlayStation 5, a typical holiday season becomes one strung with obstacles from all angles.
“You were starting to see people buy more experiences in previous years, but we can’t experience anything right now except our home,” says Associate Professor of Marketing Lauren Beitelspacher. “All this emphasis on making your home life better is where people are spending their dollars.”
What This Means for Retailers
The PlayStation 5 launched in several phases on November 12 and rapidly sold out to eager customers.
Sony’s next step, according to Lecturer Brad Johnson, could be to adjust to this unique situation by honing its ability to forecast heightened demand.
“If Sony’s supply chain was originally built to support brick-and-mortar, and now it’s all moving online, that causes a lot of disruption,” Johnson says.
Sony also could benefit by potentially providing more swift information to all parties involved in production, shipping, and distribution, according to Johnson.
“The supply chain is very complex,” he says. “It’s not just customer-retailer-Sony. There’s raw material suppliers, component manufacturers, Sony, shipping, warehousing and finally the retailers. The supply chain ends up being hundreds of companies.”
What This Means for Consumers
Even with these challenges, Johnson remains optimistic about restocks for sought-after products such as the PlayStation 5.
“There could definitely be some stockouts, but they’ll probably be working overtime to get the product into the right retailers,” he says. “You can get products into warehouses by December 22, and they can still be delivered in time for Christmas.”
And, if you can’t get your hands on one of these coveted items, Beitelspacher recommends shopping at local businesses, which will be even more dependent on consumer spending this holiday season.
“Those are the businesses that are hurting the most because they have less buying power,” she says. “People have been so conditioned to go to big-box retailers, (but) need to shop local whenever they can.”
Posted in Research & Insights