In March 2020, Andrew Schneider began facing the biggest issue his business would have to endure for more than a year.
The problems began as a high demand for freezers when people were stockpiling food at the beginning of the COVID-19 pandemic. It snowballed from there into a long-term shortage of semiconductors that has left Dakota TV & Appliance, as well as other local businesses, high and dry while trying to maintain profits and salvage relationships with increasingly impatient customers.
Semiconductors create partial currents of electricity that power a wide range of electrical products from vehicles to dishwashers and other appliances. The creation of these items have been left at a standstill with many still out of work due to the pandemic. Semiconductors are needed to create computer chips. Most appliances sold today, regardless of whether they are "smart appliances." need computer chips to function.
“A lot of these appliances are electronically driven instead of mechanical,” Schneider said. “If the brains of the operation aren’t built, we’re at a standstill. We’re going to probably be able to get some of the run-of-the-mill stuff, but as far as some of the higher-end (appliances) and smart technology, it’s going to be a challenge for all these manufacturers trying to grab from the same source.”
At Dakota TV & Appliance, the wait for a new appliance that is not in stock has ballooned to a range of one to six months. Sales have remained steady, but Schneider is trying his best to temper his customers’ expectations on when they can expect a new appliance to be delivered.
“We all as consumers got into the Amazon way of life, where if I didn’t have it, it was here in a week,” Schneider said. “That was our standard before this. Usually, we’d have a loaner if your fridge stopped working. That could buy us a week, but now we’ve got really nice houses using what is their ‘beer fridge’ normally, and that’s in their house right now until their fridge that they ordered last summer gets here.”
Schneider said the store has made a point to keep as much stock of appliances that are easier to come by as possible in an offsite warehouse. Customers who need an appliance replaced in a pinch may have to compromise their wish list if they want an immediate replacement.
“We’ve been steadily having orders in the system on mass-moving products,” Schneider said. “(We’re) trying to put together packages that might not be the thing you wanted the most, it might not be the exact model, but it gives you an option to put something in your house, because stuff happens. If your fridge dies, you need a new fridge. You’ve got to have something.”
Luckily, we have a group of guys that have been here a long time,” Schneider said. “You can kind of tell when someone’s feeling down and when a guy needs a pat on the back. It’s not fun giving bad news. Who likes to do that? We all want to give good news and make everyone happy, but over the past year you almost become a little numb to it.”
The microchip shortage has had an adverse effect on the car industry as well. Rydell Chevrolet Marketing Director Morgan Hibma said in a statement that she and her coworkers have had to change the way they do business to accommodate for the shortage, including a system in which customers can sell their own used vehicles to Rydell.
“Like all dealerships across the country, we have been impacted by the semiconductor microchip shortage,” Hibma said. “All new car dealerships have experienced a level of disruption in the supply chain. We have both new and used vehicles available and are happy to help guests order their next vehicle. We have also introduced our RydellBuys program where we will buy someone’s vehicle without them having to buy one of ours.”
Grand Forks Subaru owner Matt Bredemeier has been dealing with a lack of stock since March 2020 as well.
“We just don’t have the inventory,” Bredemeier said. “We’re down (from) what we normally carry by about 50%. The plants first shut down for a little bit after COVID hit in April because the manufacturers were affected by it as well. There were times when they were shut down for a week or two at a time.”
Bredemeier said the past six months of issues with obtaining microchips has caused the dealership to change the way it sells cars. Many customers are buying cars before they arrive at the dealership.
However, he believes this change will not be permanent. Representatives from Subaru have assured him that help is coming.
“It’s changed the way we do business,” Bredemeier said. “People are buying cars out of what we have incoming, so they’re being pre-sold before they get here. The transports will come here with our inventory and kind of turn around and customers pick them up that way. Starting in July, Subaru will be back up to its usual allocations (of stock). We’ll be at about 90% of a normal allocation. They said after July every month from there will be better and better, and we’ll be back to normal by fourth quarter.”