Why you might want to do your Christmas shopping early this year

Though it might be jarring to see shops putting up their decorations in October, if there was ever a Christmas to get your shopping done early, it might be this one.

Supply chains around the world are struggling to deal with the COVID-19 threat, says economist Cameron Bagrie - particularly in Europe, where the virus is running amok. 

"Europe supplies about $20 billion worth of imports into New Zealand," he told The AM Show on Tuesday.

"The longer that supply chain is disrupted up in Europe as COVID rears its ugly head, the more we're going to find problems bringing this stuff into the country." 

Russia, France and Spain all recently surpassed 1 million confirmed cases each, with the UK not far behind. New Zealand's recent community outbreak originated at a port, but was thankfully caught early, preventing another raising of the alert level. 

While exports from New Zealand have held up, Bagrie said imports are down about $7 billion. Partly that's due to reduced demand, with the economy here and globally going through the biggest shock in nearly a century, but supply chain issues are holding up stock from countries like the UK, Italy and France.

Bagrie said he tried to talk down the price of a jetski at the weekend, without luck.

"I hoped I'd be able to go in there and chip a little bit and get a discount - there was no chipping, there was no discounting because they didn't have the product. The products that are there, they're going to expect full margin."

Cameron Bagrie.
Cameron Bagrie. Photo credit: The AM Show

Normally when demand is low, prices come down - but when supply is also low, prices remain where they are - and retailers are less willing to compromise on price, since they can't make up for the reduced margin in sales volume.

"Ironically at the moment in New Zealand we're seeing this two-tiered pricing pressure," said Bagrie.

"Normally when you're going through a demand rut where people are not spending as much as they are normally, well people discount to shift the product. We're certainly seeing that in some parts of the economy - tourism has re-priced for the New Zealand market - but in some sectors because supply is a major issue, well if you want the goods, you're going to pony up." 

With further lockdowns and disruption likely over the northern hemisphere winter, Bagrie says it might pay to get your shopping done sooner, rather than later.