Christmas trees are ‘definitely in short supply,’ Balsam Hill CEO says

Balsam Hill Founder & CEO Mac Harman discusses how the supply chain shortage has affected local tree stores and their ability to sell Christmas decorations for the trees.

Video Transcript

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- Welcome back to Yahoo Finance. Well, ongoing supply constraints meet may mean the annual tree shopping experience requires you to dig a little deeper into your pockets this year I caught up with one New York tree vendor who's going out on a limb to try and weather challenges in the industry.

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This year, getting just the right Christmas tree may be something you have to put on your wish list for Santa. The holiday staple is just another thing harder to come by this season.

GREG WALSH: You wait until December 20, you might have a problem.

- Greg Walsh should know.

GREG WALSH: The trees love this. They love the-- they love to get woken up.

- For more than three decades, he's been spreading holiday joy to New Yorkers. He and his elves transformed local parks and beer gardens into vibrant winter wonderscapes, like this one on Manhattan's Lower East Side. He also has multiple stands in Brooklyn. He's the guy many flock to for their perfect tree and decorations.

Why are you shopping earlier this year?

- I saw they just got all the trees out. And last year, I was a little bit late to the game. So I to make sure I can get a nice top choice.

- The prices at Greg's Trees, have always been reasonable, but are 10% to 20% more this year due to supply chain issues and rising labor costs.

GREG WALSH: Labor is my biggest expense, outside the trees, by a lot. And the guys do very well here. I paid them well. They work very, very hard. This is a-- this is a rough gig.

- Thin supply and inflationary pressures have translated into higher cost for many tree vendors, Walsh emphasizes he's been working with suppliers in Canada and the US for a year to ensure ample supply so customers aren't disappointed. But he warns lights and ornaments could run short quickly.

GREG WALSH: All this kind of stuff that comes from China. It's all backed up. And they've been raising the price on us the whole year. And even after the contracts were signed, they added 10%.

- Despite the challenges, he says it's all worthwhile.

GREG WALSH: The customers and the experience is something that's very, very important to me. Like 10 years ago, I decided we weren't just going to have small stands, we were going to try to make them bigger and more fun, with cutouts, and Santa visits, and just have a little fun doing this. And it's worked out.

- Showing shoppers even the supply chain and inflation Grinch can't steal the spirit of Christmas. And here to discuss this season's tree tribulations we're joined by Mac Harman from Balsam Hill founder and CEO Mac, thank you so much for joining us.

So just exactly how much do consumers have to worry about getting the right tree this season?

MAC HARMAN: Well, I want to leave everyone with a great holiday message, but it is definitely a challenge this year to find a tree. The real tree supply is constrained. And then, on the artificial tree side, you know, trees are big, bulky things. They come from China. And so they're really low value to bring over in these precious ocean containers right now. So fewer trees have come into the market. And so they are definitely in short supply.

ALEXIS CHRISTOFOUROS: So is all that talk, though, of, of a Christmas shortage really real? I mean, I know a lot of these Christmas tree farms have been shutting down. I don't know if they're shutting down for good. So is this just going to be an issue we're going to have to deal with in the coming years? Because we know you just can't snap your fingers and have an 8-foot spruce appear.

MAC HARMAN: You know, I think, I think we're going to be OK. And there's two reasons for that. The first is that, at this point in time, actually about 85% of households who set up Christmas trees use artificial trees. And most people have their tree from the prior year. So you may not be able to buy a tree as easily, although there's plenty of supplies still, at this moment, in the market. But, but people are using those trees again. So I think we're going to be OK there.

On the real tree side, that gets challenged some because those are 10-year crops. You plant a tree, it actually grows in a nursery for two years, and it's in the ground for eight years. And so the decisions about what trees we're going to have, those are made 10 years ago. And so sometimes supply and demand doesn't totally work out. And if you have a crop that's lost due to a severe drought or something, that can create some of these blips in supply.

But on the artificial side, you can ramp those up. We've already ordered for Christmas '22, believe it or not. So we've already had to estimate, hey, how many trees are we going to sell through this year? How many are going to have left over? How many then should we order for next year?

So we've made those decisions. But generally you can get the tree that you're looking for. You may just have to look around a little bit or be patient.

- I'm so glad that you said that so many more people are buying artificial trees. Because I've read that as a statistic and nobody will believe me when I say it. Because you know, most people that I know at least, go out and they look for their fresh tree and get it home.

But I want to ask you, how much more are trees costing this season, both the artificial variety and I know, you know, for if you're buying the real deal, prices are anywhere between 10% and 30%.

In that interview I did, that vendor said his prices were going up 10% to 20%. And you know, no worries if you're looking for a smaller tree. But if you want a really bigger one, 7, 8, 9 feet tall, then you better make sure that you're willing to pay and you need to get it early.

MAC HARMAN: That's right. You know, the tree prices are up on the real tree side mostly due to transportation costs. It's been hard to find truckers. And then the fuel costs have gone up. And then the labor side. And of course, in New York City, you're going to see that labor constraint everywhere this year.

On the artificial side, we're also seeing prices up around 20%. And that's due to the inbound costs of getting our products from Asia to here. And that's actually true for all the holiday decorations. It was mentioned in the previous story about lights, ornaments. We're seeing that. I'm seeing that out in my competitors' store checks when I go out and see what's going on.

Those types of items, the trim-a-tree category's in really short supply this year. I actually think that's a bigger constraint than trees. We're finding, at Balsam Hill, every day we're getting dozens of new containers in that we should have had months ago.

And when they come in, we email our customers who signed up with a Notify Me feature to say, hey, when that's in stock, I want to know. And we're seeing items that come in for the first time. And we're selling $100,000 of them in a couple hours because people have been waiting for those kind of trim-a-tree items-- ornaments, tree skirts, tree toppers, you know, mantelpiece decorations, all those kinds of things. And so those are what's really been in, in the shortest supply this year. And I think, you know, we don't have too many more days left before Christmas.

So the good news is, what I'm seeing in the market, there are still trees out there. We weren't sure exactly how it's going to play out. This is really the last big weekend for Christmas trim-a-tree shopping. And there is plenty of supply of Christmas trees still around. It's that decor that is more, you know, constrained. I've seen just empty shelves in some of the big retailers I've been to in the last few days.

- Well, good news for procrastinators like me. I will be able to get my tree. The Grinch cannot take that away from me. Thank you so much for your time, Mac Harman, Balsam Hill founder and CEO.

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