Back to top

Image: Bigstock

Retailers Prep for Early Holiday Shopping Amid Supply Chain Woes

Read MoreHide Full Article

Thanks to the two-pronged approach of a massive stimulus package and stepped-up vaccinations, there is growing eagerness among consumers to venture out and shop at stores this holiday season. Easing of social distancing norms and resumption of active social lifestyle and events are likely to fuel demand across a diverse set of categories. While these raise optimism about a fabulous retail season, the spread of COVID-19 and its impact may upend the festive mood.

It’s a known fact that the industry is currently dealing with supply chain bottlenecks, rising freight charges and labor shortages. The spillover effect of the same will be quite visible during the holiday season as well. Retailers generally ramp up hiring ahead of the festive season to ensure that they are adequately staffed. But a tight labor market has left them scrambling to find workers. Per media reports, quite a few companies are offering higher wages, sign-on bonuses, and even education perks to woo workers.

Well, inability to meet the demand, failure to restock inventory at fair prices or delay in getting the products delivered to consumers’ doorsteps could compound retailers’ woes. At the moment, consumers should brace for fewer discounts and longer-than-normal shipping times this shopping season. According to Salesforce, U.S. retailers are likely to witness an additional $223 billion in costs of goods sold this holiday season, which include year-over-year increase in freight, manufacturing and labor costs.

Early Start to Holiday Season

Challenges might persist but retailers are finding innovative ways to make the most of the season. Retailers are looking for an early start to the festive season and ensuring they stock enough to fulfill predicted consumer demand.

Per Mastercard SpendingPulse, U.S. retail sales — excluding automotive and gas — for the “75 Days of Christmas” that runs from Oct 11-Dec 24 are anticipated to increase 6.8% from a year earlier. With e-commerce still being one of the preferred modes for shopping, Mastercard SpendingPulse foresees online sales to rise by 7.5% during the aforementioned period.

The survey further projects year-over-year increase in sales for myriad categories during the “75 Days of Christmas” — 45.4% for apparel, 11.8% for electronics, 60% for jewelry and 92.2% for luxury items (excluding jewelry). Department stores are likely to register sales growth of 14%, per the report.

To beat the COVID-19 blues, retailers are increasing product visibility on online platforms, enhancing customer engagement on social channels and making logistics improvements. Companies plan to recruit a reasonable number of seasonal associates to deal with curbside and in-store pickup of online purchases as well as doorstep delivery. Additionally, they are likely to appoint more full-time and seasonal warehouse staff to ensure smooth supply of inventories to stores from distribution centers during the festive period.

Closing Remarks

Retail bellwethers from Walmart (WMT - Free Report) to Target (TGT - Free Report) and from Best Buy (BBY - Free Report) to Costco (COST - Free Report) are undertaking every effort to make the most of the upcoming season. Meanwhile, Amazon (AMZN - Free Report) has recently unveiled plans to recruit 125,000 warehouse and shipping workers. These are in addition to the 40,000 corporate and tech openings that the e-commerce giant had announced earlier.

Retailers have been aggressively adopting strategies and making planned investments to cater to customer demand be it in store or online. Undeniably, expedited delivery services and contactless payment gateway will continue to play a crucial role in maximizing share of customers’ wallet this holiday season.