Holiday shoppers urged not to wait, as inventory shortages predicted
Store shelves during the holiday shopping season – and yes, we’re talking Hanukkah and Christmas just days after Labor Day – might turn out to be cheery but still crowded.
A squeeze in inventory could frustrate buyers, as 82% of retail executives surveyed are somewhat or very concerned about inventory shortages, according to a new survey from KPMG.
And 55% of those surveyed plan to set up alternative suppliers.
“I can’t remember a time when concerns about inventory were so great,” said Scott Rankin, national advisory manager for the consumer and retail team of the US advisory practice. States of KPMG in Boston.
Last year, Rankin told me, many retailers feared they would be stuck with too many clothes and other gift items as consumers planned smaller family gatherings and limited their trips to malls to in light of the coronavirus pandemic.
Despite this, consumers shifted into high gear in December, and the National Retail Federation ended up reporting in January that retail sales during the holiday season of November-December 2020 unexpectedly increased by 8.3. % over the same period in 2019 to reach $ 789.4 billion, overtaking National Retail. The Federation’s holiday forecasts despite the economic challenges of the pandemic.
What will Santa’s stash look like?
This year, retailers are expressing their first concerns about how they will stock shelves as they tackle truck driver shortages, supply chain disruptions, congestion at ports and shortages of sea containers.
Some toy makers are sounding the alarm bells and warning consumers about the possibility of empty shelf spaces during certain parts of the season. Isaac Larian, CEO of MGA Entertainment, whose company owns LOL Surprise! and Rainbow High dolls, told CNN Business, “There is going to be a serious shortage of toys this year.”
Enter contingency plans and ready-made strategies.
If things get really tight, retailers know that in some cases you will only make $ 25 or $ 50 on something that can hold a bow.
The KPMG survey noted that 59% of retail executives plan to invest more heavily in what they call “safety stocks” – or extra items to have on hand in case demand is needed. would increase unexpectedly.
You know, kind of like buying extra candles, cute coffee mugs, or boxes of chocolates for your own gift cabinet in case someone unexpectedly gives you a gift.
Koeze in Grand Rapids warns of shipping and delivery delays
Some retailers pitch directly with their loyal customers to explain some of the challenges ahead.
Grand Rapids-based Koeze actually included a letter signed by its president, Jeff Koeze, discussing delivery and shipping issues as well as his vacation catalog that arrived in the mail in September.
Koeze, a fourth generation family business, is well known for its Colossal Cashews, Cream-Nut branded peanuts and peanut butter, chocolate turtles and gift baskets.
The company has told its customers that it “is experiencing shipping delays on many items that we need.”
Additionally, the company said there had been delays in deliveries to customers.
As a result, the letter urged customers to place their orders as soon as they could.
Donald Cumming, the company’s vice president of marketing, told me in a telephone interview that the company is currently in good inventory position for all products sold in the catalog. The chocolates are made in Grand Rapids and the nuts are also roasted there.
The company says it has enough supplies now, given the expected demand.
But if demand is strong and exceeds expectations, Cumming said, some suppliers may not be able to restock key components in time for the holidays, such as those that provide wicker baskets and packaging from the UK. ‘foreigner.
The past year has been strong, Cumming said, as many people were not traveling during the pandemic.
“Rather than spending money to see people, people spent money on gifts,” he said.
Of even greater concern this year, he said, is the threat of delivery delays for customers.
Implementing partners are now near full capacity, he said, and labor shortages for delivery companies are a growing concern during the holiday season.
Many consumers, he said, have become addicted to two-day shipping, but this year ordering too close to the holidays could prove problematic.
By asking customers to order well in advance, the business can better work with them to ensure gifts arrive on time.
“We’re very excited about the holidays right now,” Cumming said. About 80 to 90% of the company’s sales are made in the last three months of the year.
The Advance Buy Push Begins Now
Some retailers are trying to get shoppers to think of September as the new December and stock up on goodies now.
For those thinking about the calendar, this year there will be a month between Thanksgiving and Christmas Day. Thanksgiving is November 25. Hanukkah will begin on the evening of November 28 and end on the evening of December 6 this year.
More cynical consumers, of course, might wonder if scarcity fears can be selfish prophecies to drive up prices and cover rising shipping and transportation costs. Can a shortage be real, after all, if you’re willing to just wait or buy something else?
Try saying this to someone who is desperate to find the perfect gift on a list.
Just try to finish a book when someone wants, for example, a new Barbie Dreamhouse for $ 200 or a Lego Star Wars: The Child for $ 80, also known as Baby Yoda.
Savvy consumers can already spot some signs of problems ahead. The aisles of some clothing stores don’t seem as crowded. The back-to-school sections of some retailers started to empty a week or two before the first day of school.
Sometimes you have to go to more than one store, even the same chain, to find a better selection. Or you have to go online to that big box retailer’s website to find more sizes and options.
The big push towards online shopping – including ordering online and picking up inside the store or curbside – will continue.
Ecommerce sales are expected to grow 35% this holiday season, surpassing robust sales in 2020, according to the KPMG survey.
“Consumers continue to move a greater portion of their shopping online,” Rankin said.
And the pandemic remains a concern, even though a vaccine is available now and was not last year for most people.
How long the surge of the delta variant will last remains unknown. What lies ahead regarding the virus will clearly have an impact on consumer behavior.
“COVID has changed the way people shop,” Rankin said.
He gave an example of how people have changed the way they shop in malls and stores. Instead of going to five stores and spending $ 50 at each store, for example, many consumers will now spend the same $ 250 overall, but at only two or three stores.
It’s more important, Rankin said, for retailers to reach out to their loyal customers early in the season to capture that sale.
Many retailers plan to launch special loyalty program promotions as well as Black Friday and Cyber Monday sales to boost business.
Retail executives forecast 2021 holiday sales to average 35% of their company’s total annual sales, according to the KPMG survey.
KPMG expects 2021 holiday sales for U.S. retailers to be 7% higher than last year – a growth rate that is almost double the historic annual growth rate of the retail industry .
Retail executives believe prices can rise up to 15% year over year. At the same time, 68% think this holiday season will be “a lot more” or “a little more” promotional than last year.
While no holiday shopping season would survive without big discounts, Rankin predicts that some offers may not be as good as they historically were at the start of the season.
Buyers who want to stay on a budget may need to work overtime to keep an eye on selling prices and inventory. Or, if things go wrong, don’t laugh at loading gift cards.