The holiday season is in full swing, but there are still challenges

NEW YORK (AP) – Encouraged by solid employment, healthy wage gains and significant savings, shoppers return to stores and spill out with all types of goods.

But the big question is: How much will supply shortages, higher prices and staffing problems dampen their mood this holiday season?

Americans who are already tired of pandemic-induced social distancing policies can get angry if they can not check items on their holiday wish lists, or they may feel disappointed by the meager holiday discounts. What exacerbates their bad mood is the fact that many frustrated workers said it stopped ahead of the holidays, leaving companies in their busiest time of year.

Shoppers are expected to pay on average between 5% and 17% more for purchases of toys, clothing, appliances, TVs and other purchases on Black Friday this year compared to last year, according to Aurelien Duthoit, senior sector consultant at Allianz Research. TVs will see the highest price increases on average, an increase of 17% from a year ago, according to the research firm. This is because the available discounts will be applied to items that are already expensive.

Such frustrations could dampen sales for the holiday season, which is set to break records.

The National Retail Federation, the country’s largest retail group, predicts holiday sales will increase between 8.5% and 10.5% compared to the holiday season in 2020, when shoppers locked in during the early part of the pandemic spent their money on pajamas and items for the home – mostly online. Holiday sales rose 8.2% in 2020.

“I think it’s going to be a messy holiday season,” said Neil Saunders, CEO of GlobalData Retail. “It will be a little frustrating for retailers, consumers and workers. We’re going to see long queues. We’ll get to see more cluttered stores. We’ll see delays when you collect online orders. “

Jill Renslow, executive vice president of business development and marketing for Mall of America, the nation’s largest shopping mall, expects customer numbers on Black Friday to be close to 2019 levels, saying its store tenants see “power shopping” earlier in the season. But she acknowledged that the mall’s tenants have struggled with staffing, and as a result, the mall will open two hours later and close an hour earlier on Black Friday.

“They (retailers) do everything they can to deliver a great guest experience,” Renslow said. “But consumers will have to be patient and know that the queues can be a little longer.”

Still, do not distance yourself from the resilience of shoppers who have shown signs of wanting to celebrate the holiday after muted celebrations last year.

Kathleen Webber, a 58-year-old university professor living in Yardley, Pennsylvania, said she is returning to hold large family gatherings for the holidays and will buy more gifts after spending the holidays last year with only her husband and three children.

“Everyone is so happy to be together and we want to celebrate that,” said Webber, a great online shopper. But the fear of shortage is forcing her to complete holiday shopping before the end of next week; normally she would wait until December 21st to complete her online purchase.

Retailers have also proven to be robust.

As the pandemic forced non-essential stores to close for several months during the spring of 2020, experts feared the deaths of department stores and clothing chains. A number of iconic retailers already struggling reorganized during bankruptcy, including Neiman Marcus, JC Penney and Brooks Brothers. Meanwhile, big retailers like Walmart and Target, which were allowed to remain open, only got stronger.

But many retailers have returned to a healthier economic state since then. The percentage of U.S. retailers defaulting on their debt increased by 20% last year compared to 6% for all corporate issuers, according to S&P Global Ratings. This year it is less than 2%.

Store closures have also flattened out, which is a reversal of the gloomy picture in 2020. Coresight Research, a global analytics firm, says retailers in the U.S. have announced 5,057 store closures for the year, but the number of store openings is 5,103 per store. November 19 Coresight Research predicted in June 2020 that there would be as many as 25,000 store closures last year, but in reality the number was just over 8,000.

The companies that were able to survive the pandemic were also the ones that were quickly able to turn around. Many switched their offerings from dressy clothes to casual wear, and department stores like Macy’s, which never provided such services as pick-up at the curb, suddenly launched them. Others got rid of their money-losing locations.

Some of the changes introduced in 2020 out of necessity seem to have come to stay, including offering big holiday discounts earlier in October to smooth out peak bookings in online booking, and to do away with Thanksgiving Day stores and move customers online instead of offers.

And while the pandemic-induced clogs in the supply network have reduced the inventory needed to meet customer demand, such shortcomings have also proven to be a golden edge. Slimmer inventories have brought some pricing power back to retailers who have been locked in a vicious circle of discounts for years. Such non-stop campaigns have eroded profits.

“Even with the rising labor costs and rising supply chain costs, retail earnings have been quite good,” said Ken Perkins, president of Retail Metrics LLC, noting that when the pandemic hit, it looked like “the sky was falling and retailers would never see a profits again. ”

_______

Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

.

Leave a Comment

Advertise