A US toymaker says it's prepping for a 'huge' January as shoppers cash in gift cards for products that didn't make it onto shelves before Christmas

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A US toymaker says it's prepping for a 'huge' January as shoppers cash in gift cards for products that didn't make it onto shelves before Christmas
Retailers are scrambling to stock shelves in time for Christmas.Eduardo Munoz Alvarez/Getty Images
  • Supply chain delays are boosting sales of gift cards because some presents remain out of stock.
  • Some people will hold on to their gift cards until shelves are restocked and they can buy what they really want.

Toymakers and other manufacturers around the world are scrambling to get products on shelves in time for the holidays but ongoing supply chain delays and pile-ups in ports mean some of these items won't arrive in time.

So some are holding out for a January boost, anticipating that customers will cash in gift cards that were given out over the holidays to buy items that weren't immediately available.

Jay Foreman, CEO of toymaker Basic Fun, is one of them. Foreman told The Los Angeles Times that he's expecting a "huge" January as shoppers spend gift cards on things they couldn't find before Christmas.

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According to payment service Blackhawk Network, gift cards have become a popular option this holiday season and are no longer thought of as a last-minute gift but a practical choice. Blackhawk estimates that gift cards will account for nearly half of the overall holiday gifting spend worldwide in 2021, up from 27% in 2020.

Analysts say that much of the late stock could end up being heavily discounted in stores. "It is simply a matter of time before late product hits the floors and begins to drive up promotions," a group of BMO analysts wrote in a note to clients earlier this month.

Off-price stores such as TJ Maxx and Ross are in prime position to benefit from this. "As goods arrive late and are canceled by the original importer, off-price retailers can capitalize on the excess inventory," Brett Rose, CEO of wholesale distribution company United National Consumer Suppliers (UNCS), told Insider.

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"We have seen $1.4 billion worth of retail overstock in the first three-quarters of the year alone, which far surpasses the same time period last year and 2019," Rose said.

UNCS sends products to several off-price retailers including Ross Stores and some TJX-owned stores, along with full-price retailers such as Macy's. TJX is the parent company for TJ Maxx and Marshalls, among others.

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