Chris Butler, the CEO of the National Tree Co., said the Cranford-based business has been doing all it can to prepare for the holiday season — starting with a decision made months ago that the company was willing to pay whatever it took to ensure the obviously seasonal product will get into the country in time from China, where the vast majority are produced.
Despite this, Butler has a warning for consumers looking to buy artificial trees: Buy them now.
“The message we’re trying to get out is this: Don’t wait, because if you do, there’s just not going to be many trees around — if any at all,” he said.
The coming Christmas tree shortage is another example of the impact of the COVID-19 pandemic, which has wreaked havoc on the supply chain of so many companies. And the shortage of containers to bring the trees over and the delays at some ports to unload the ships (see images of nearly 100 big ships waiting off the coast of California) is just one part of the supply-chain conundrum.
Butler sees another brewing logistics problem that will impact a number of items soon: A shortage of UPS and FedEx warehouse workers and drivers to get product to consumers.
“Not only is the supply going to come in late for a lot of people, but I think that the FedEx/UPS issue will potentially trump all of these other issues, because I do think there’ll be bottlenecks in delivery,” he said.
All of this comes at a time when demand for artificial trees and holiday décor (thinks wreaths and garland) has never been higher.
Call it the Instagram factor. Homeowners are decorating their houses — and throughout their houses — like never before, Butler said.
“The days of just having one tree in the corner are over,” he said.
The demand, of course, is good news for the National Tree Co., a multimillion-dollar company founded by Sal Puleo in 1990 and sold to Sun Capital, a private-equity firm, in November 2019. While doing business has never been harder, the bottom line is getting stronger. The company, which was up 30% in revenue in 2020, is hoping for a similar result this year.
Butler, who came to the company this summer, spoke with ROI-NJ about all things trees and supply chain. Here’s a look at the conversation, edited for space and clarity.
ROI-NJ: Give us an overview of the business.
Chris Butler: We make very high-quality trees, and 95% of our business is online — though we do most of our business on the websites of others. If you go to Amazon, Wayfair, Walmart, Target, etc., place your order on those websites, we fulfill that order on behalf of that customer. That’s the vast majority of the business.
ROI: How big are the trees, how much do they cost — and how much has that price increased this year due to supply chain issues?
CB: Our top-selling tree is 7½ feet tall. And it is going to be about 20-25% more from a price perspective. Our trees range anywhere from $100 to $600.
ROI: You mentioned wreaths and garland. How much of your business are those items compared to trees?
CB: They are probably 20% of our business from a revenue perspective. From a unit perspective, it is much higher, but trees have a much higher price point.
ROI: OK, let’s get into the supply-chain issues. How long is the shipping process — and where do they come into port?
CB: We have three main ports. One is here. One is Norfolk, Virginia, and in one is Long Beach, California. It’s about a six-week turnaround at all of them. It’s a two-week ocean journey from China to Long Beach, but, there, you have an additional two-week wait time to just get into the Long Beach port. Then, there’s two weeks of clearing customs and getting into the warehouses. To the East Coast, it’s a four-week ocean journey and then two weeks to clear.
For us, the hardcore cutoff will be Oct. 15. After that, the product just won’t be here in time.
ROI: Explain your business timeline and when things started to become a concern?
CB: We place our orders at the end of the previous season, sometime in November, December. They’ll start shipping in January, February, but May, June, July, August, even September are the peak shipping months.
There has been a very high demand for goods from China this year and that has created this incredible shipping crisis, caused by a very constrained amount of containers available. It’s very difficult to get product into the country. Because of this, we have contracts with a lot of the shipping companies that have basically just been ripped up and thrown out the window. We are getting the containers, but we’re paying far in excess of the usual rate.
When we realized this was happening, we acted very quickly. We decided that we were going to pay the increased rates, because we didn’t think it was going to get any better. We said, ‘Let’s just get as many containers into the country as possible.’
Today, we probably have 90% of what we’re hoping to bring in this year.
ROI: That’s great, but it doesn’t sound cheap — how have your retailers reacted?
CB: We got with all of our customers and told them about the situation and told them that there’s going to be an increased price to pay. They understood. They didn’t like it, but they realized that’s the situation.
ROI: This must put you in a good position as a supplier, yes?
CB: We feel that we’re in pretty good shape. We’re getting calls from a lot of retailers that we either don’t do a lot of business with, or don’t do any business with, asking if we can get them trees.
ROI: All this, at a time when demand is skyrocketing. Why is that?
CB: Consumers are spending more money and they have more money — because they’ve been saving a lot. And then, because of the surge in homebuying, people have more new homes to decorate. We know furniture sales are up massively, so we’re expecting seasonal decor sales to be up as well.
Because of this, I would expect store shelves and online retailers will be out of stock in early to mid-December. Again, we think the bigger issue there will be the ability of UPS and FedEx to get the deliveries out.
ROI: Supply-chain issues are making a lot of industries rethink their supply chain. What percentage of product comes from China — and are you looking to find ways to lower that percentage?
CB: About 95% of our trees come from China. And, yes, we’re definitely having global sourcing discussions. Since June, we’ve actually sourced quite a bit of product from the U.S. Not trees necessarily, but certainly some wreaths and other holiday décor. We’re definitely having those longer-term global sourcing discussions.
ROI: Let’s turn to New Jersey and National Tree Co. How many people are with the company?
CB: We have about 150 people, most of which are in New Jersey, where we have our headquarters and four warehouses.
ROI: What has it been like at the company since you joined?
CB: We are fortunate to have tremendous people with a tremendous amount of history with the company. Everybody has been willing to step in and work hard and figure things out. We have a daily call where we go through how we’re doing on everything from containers to our warehouses, with our customers and logistics and technology. Everybody’s participating. There’s never a day where we finished in 10 minutes. There’s always something happening, and we’re dealing with it.
I think it’s really bought the company together. There’s a new level of transparency. The level of working together across departments has been really amazing. In some ways, I think it has done us a favor in terms of getting us organized and making us stronger. If we can get through this, we can get through anything.
ROI: And for you personally?
CB: I feel there is no better education than stepping into a crisis. I’ve had to learn really fast and to start making decisions from Day One. The whole 90-day transition plan quickly went out the window. It was more like a 90-second plan. It’s been a very quick and fast education.
Sometimes I step back and say, ‘Yeah, I stepped in it.’ But, most of the time, I’m excited about the opportunity. And it’s a great company, and the products are amazing. That’s what makes it worth it.
ROI: How so?
CB: What we really sell is joy. We bring joy to people’s lives. We have this big showroom here and, when I’m in the office, I like to walk around and remind myself of what we really sell. That’s why it’s so important that we do everything we can to bring these products here.
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