Amid growing supply chain concerns and rapidly rising inflation in the time of the corona pandemic, Americans are bracing themselves for a mixed scenario during holiday season shopping.
Americans have been warned that inflation would be an inevitable part of the post-pandemic economic recovery by economists and financial experts. Assurances that inflation would be temporary don’t match up with the reality: Prices have been rising for months.
Prices climbed 5.4% in September from the year prior, according to the Bureau of Labor Statistics report this week, with food, shelter, and gasoline prices seeing some of the biggest spikes.
In order to get a sense of what’s happening with inflation, once the Covid-19 pandemic began last spring, just look at how the demand for travel plummeted. Folks canceled their tickets and delayed vacations.
This year vaccinated population and people armed with Trump and Biden’s stimulus checks, Americans started to hoard money and eventually went on a spending spree, buying new clothes and going out to eat again. Another reason for the current rise in inflation can also be demand and supply chain issues that began during the pandemic.
At the grocery store, Americans can clearly feel that everyday items cost more than they did last year.
Online shoppers will be buying less this holiday season but spending more. Holiday e-commerce could rise 7% during November and December to reach a record $1.3 trillion globally, according to Salesforce forecast.
While the actual amount of dollars spent is rising, shoppers will likely be purchasing few items. That’s because inflation will make gifts as much as 20% more expensive compared to last year, according to Salesforce. The quantity of orders, meanwhile, is expected to fall 2% worldwide.
Retailers and manufacturers are watching closely as prices inch higher around the world due to soaring freight costs, higher wages, pricier raw materials, and other pressures. Demand has largely remained robust, but some companies are missing out on sales as they struggle to keep shelves stocked. These supply issues are expected to persist.
U.S. retailers face an expected cost increase of $223 billion during the holiday season, according to Salesforce. Unlike last year, there is still unemployment lingering and lack of stimulus checks would require creative ways by consumers to deal with higher costs. Shoppers are seeking out workarounds such as using buy-now, pay-later services.
If you are expecting a good deal or a high-demand item this holiday season, you better shop early. Companies have less of a reason to put items on sale, as supply chain snafus tighten inventories. Instead, promotions will likely be strategically placed on goods that retailers have in excess stock. And that might not be something on top of your holiday wish list.
Home-related goods are expected to be among the most popular purchases this holiday season, with apparel and luxury items also making a comeback as customers return to the office and social gatherings. The ability of brick-and-mortar stores to lure in shoppers will also play a role in online sales as more companies offer options such as in-store pickups for online purchases.
Overall, many consumers will be faced with price increases and product shortages as the winter and holiday season approaches. The White House met with business leaders this week to discuss the supply chain delays that have plagued almost every industry that relies on imported goods. After that meeting, the White House announced that Port of Los Angeles would begin operating 24 hours a day to process shipping backlogs more quickly.
Consumers prepping for holiday shopping have been urged to start early to ensure they can find the exact product they are looking for on their holiday wish list this year.
