Where are my appliances? An honest review of the 2020 appliance supply crisis
Disclaimer: this article is an opinion piece written in response to a known industry supply shortage. The content of this article is strictly my opinion informed by years of industry experience and study in economics. The content of this article is in no way affiliated with my clients.
I bought kitchen appliances in 2020. I knew replacing my appliances was an ambitious undertaking. I had insider information - and even with that information, my appliances took two months to ship.
It was back in May, and everyone was hunkering down; coronavirus cases in New York and Boston had recently peaked. Was it even going to be safe to have someone deliver or install my appliances?
I knew factories were operating at a reduced capacity and the future of production was uncertain.
Most of you are probably thinking -- what the heck? My goal in this post is to provide a little perspective on why this is happening and what you should do if you plan a home renovation project.
2020 is an infamous year, and I’ll specifically address supply-side challenges unique to the pandemic. Many of you know me as an appliance expert. In a past life, I earned a degree in global economics. I want to address the industry’s state, provide a possible explanation for what’s happening, and advise best practices on how to order appliances during this crazy time.
So I want to dig deeper into this topic with a little global economics 101. Before I address appliance industry-specific challenges, I want to first talk about global manufacturing as a whole. Today, many manufacturing and electronics companies source parts, raw materials, labor, and sometimes finished products from other companies worldwide. Under normal circumstances, the supply chain operates more efficiently as production can continue across time zones.
COVID-19 originated in China and then spread west, impacting populations across the globe. China is the world’s manufacturing powerhouse, followed by the United States, Japan, Germany, and South Korea - all countries affected by the pandemic. Instead of the normal exchange of goods and services between countries, production facilities worldwide struggle to meet demand. Many factories are closed or operating in a reduced capacity. If you’ve placed an order for anything in the last six months, you probably experienced a longer-than-normal lead time.
The coronavirus pandemic is a problem affecting people. Nearly every industry, office, showroom, job site, and factory had to modify for new social distancing protocols. If a worker gets sick, everything shuts down for cleaning. The appliance supply crisis results from factories operating at reduced capacity, coupled with a surge in demand.
The appliance industry is reliant on people to design, assemble, ship, and sell products. I want to debunk the myth that robots build appliances in a vacuum. Sure there are robots, but people in factories operate these robots. Many of these facilities provide jobs and economic stability to towns in the United States.
Nobody anticipated a global pandemic. Manufacturers base production schedules on expected demand. To do that, most look at past sales trends to forecast production needs for the upcoming year. The coronavirus pandemic radically changed consumer behavior. Families are cooking at home over 200% more than in past years. With summer vacations canceled, schools closed, and restaurant closures, families rely on their home appliances more than ever before.
The appliance industry, like many others, is suffering a similar supply crisis. Three factors amplify this situation.
1. COVID-Driven Behavior
2. Inelastic Demand
3. Stay-At-Home Lifestyle
First is a change in consumer behavior driven by the pandemic. Families are taking fewer trips to the grocery store, but stocking up on more food each visit. Consumers need more space to store more food. Refrigerator sales are up. This increase in demand is also consistent for other categories, including cooking, dishwashers, grills and wine refrigerators.
Second, large appliances are products with relatively inelastic demand, an economics term that means you need them. When your fridge breaks, you will buy another refrigerator, and you can’t substitute it for something else like airline tickets or a new bike. Although not COVID-specific, demand inelasticity is a constant driving factor for the appliance industry.
The third factor is that people are home more than ever, with extra time to tackle lingering projects. For example, your old noisy dishwasher wasn’t a big deal until you started taking video meetings from your kitchen. Or your ancient stove wasn’t a problem until you began cooking at home every night.
So what’s happening? Increased demand, coupled with a global manufacturing crisis, means longer lead times, busy installers, and unfortunately, occasional frustrated customers. My goal is to give you the most significant chance of success. Let’s avoid common mistakes that people make that elongate the process. Without further ado, here is my best advice for a successful buyer's journey.
2020 Appliance Buyer’s Advice
1. You can’t be picky.
Don’t set your heart on one particular product. Instead, it’s best to pick out 3-5 options that would meet your needs. You might discover a new brand of feature that you love.
2. Only buy in-stock products.
If a product is not currently in stock at a store or their local warehouse, assume it’s never coming. There are thousands of in stock products to choose from. There are tens of thousands of products on backorder right now. It can take months for out-of-stock products to arrive. Many have long waitlists from other customers who are also waiting for that same out-of-stock product.
3. Order appliances proactively.
If your old appliance needs replacement, order a new product ASAP. Given longer lead times, you need to palace your order proactively. This way, you have a better chance of getting your new product before your old appliance dies. It also means you’re more likely to schedule an installer on a convenient day for you.
4. Store appliances for big projects.
Under normal circumstances, I recommend scheduling your appliance delivery about 30 days in advance. During COVID times, you’re better off buying your appliances and storing them until your builder is ready. If you bought cabinets to fit a specific appliance model, you better order it proactively and have it on site.
5. Give your local appliance rep a break.
None of us saw this dumpster fire of a year coming! Your appliance sales rep is not responsible for coronavirus or its supply-side effects. I know it can be frustrating to hear bad news, but your appliance sales rep wants you to be happy. Trust me; they want you to have a positive buying experience. They really want you to take delivery of your appliances. They’re on your team, and they will do everything they can to help you.
I know I'm walking a fine line here. I want to give you an honest assessment of what I think is going on. I also want you to proceed with your project as planned. New appliances are totally worth it! This is a temporary problem that is already beginning to improve. I'm seeing factory improvements across many major brands. With that said, I want you to make a successful purcahse. Buying a product that is out of stock can be a frusterating experience. And with thousands of in stock products, there's no reason to wait.
I don't currently sell applinaces, but I have in the past. I have facilitated thousands of kitchen projects ranging from sprawling luxury compounds, to tiny homes, and everything in between. Your appliance salesperson is trying very hard to help you during this crazy time. They want you to have a successful buyer's experience. Please be nice to them, they are on your team!
My best advice is to take a step back, take a deep breath, and realize that it's just appliances. We have bigger challenges in 2020. Stay healthy, friends.