The festive season is moving to a higher level but challenges remain

New York (AFP) – Buoyed by strong employment, healthy wage gains and big savings, shoppers are returning to stores and splurge on all kinds of merchandise.

But the big question is: To what extent will supply shortages, rising prices and employment issues affect their mood this holiday season?

Americans, already exhausted by the social distancing policies caused by the pandemic, might feel irritated if they can’t check out items on their holiday wish lists, or they might be disappointed by meager holiday cutbacks. Exacerbating their bad mood was the fact that many frustrated workers called it quits before the holiday, leaving companies in a short-term position during their busiest time of the year.

Shoppers, on average, are expected to pay 5% to 17% more for toys, clothing, home appliances, televisions and other Black Friday purchases this year than last year, according to Orelene Duthwaite, senior sector advisor at Allianz Research. TVs will see the highest price hikes on average, up 17% from last year, according to the research firm. That’s because any available discounts will be applied to already expensive items.

Frustrations like these can nullify the holiday season’s supposedly record-breaking sales.

The National Retail Federation, the nation’s largest retail group, expects holiday sales to increase between 8.5% and 10.5% compared to the 2020 holiday period when shoppers, locked into the early part of the pandemic, spend their money on pajamas and household goods. – Mostly online. Holiday sales rose 8.2% in 2020.

“I think it’s going to be a chaotic holiday season,” said Neil Saunders, managing director at GlobalData Retail. It will be a bit disappointing for retailers, consumers and workers. We’ll see long lines. We’ll see messier stores. We will see delays while collecting 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 and said its store tenants are seeing “robust shopping” earlier in the season. But she acknowledged that the mall’s tenants are understaffed, and as a result, the mall will open two hours later and close one hour earlier on Black Friday.

“They (retailers) are doing everything they can to provide a good guest experience,” Rensloo said. “But consumers will need to be patient and know that the lines may be a little longer.”

However, don’t discount the resilience of shoppers who have shown signs they want to celebrate the holidays after last year’s silent festivities.

Kathleen Webber, a 58-year-old college professor who lives in Yardley, Pennsylvania, said she’ll be returning to large family holiday gatherings and buying more gifts after spending the holidays last year with only her husband and three children.

“Everyone is so happy to be together, and so we want to celebrate,” said Webber, a major online shopper. But fear of shortages pushes her to finish her holiday shopping by the end of next week; Usually, she would wait until December 21 to finish her online purchase.

Retailers have also proven to be resilient.

When the pandemic forced non-essential stores to close for several months during the spring of 2020, critics feared the death of department stores and clothing chains. A number of iconic retailers that were already struggling to reorganize in bankruptcy, including Neiman Marcus, JC Penney and Brooks Brothers. Meanwhile, big retailers like Walmart and Target that were allowed to stay open are getting stronger.

But many retailers have since made a financial recovery. The percentage of US retailers who defaulted on their debts rose 20% last year, compared to 6% for all corporate issuers, according to S&P Global ratings. This year, it’s less than 2%.

Store closures have stopped, too, a reflection of the bleak picture in 2020. Coresight Research, a global research firm, says US retailers have announced 5,057 store closings for the year, but the number of store openings is 5,103 as of 19 Nov. Coresight research in June 2020 predicted that there would be as many as 25,000 stores closed last year but in reality, the number was just over 8,000.

The companies that managed to survive the pandemic were also able to pivot quickly. Many switched their offerings from elegant to casual and department stores like Macy’s that had never offered such services as curbside pickup suddenly fired them. Others got rid of their losing positions.

Some of the changes made in 2020 out of necessity appear to be here to stay, including introducing big holiday discounts earlier in October to ease peak periods of online ordering, ditching Thanksgiving store shopping and moving customers online instead. to get deals.

And while clogs caused by the pandemic in the supply network have reduced the inventory needed to meet shoppers’ demands, this shortage has also proven to be a plus. Smaller stockpiles have brought some pricing power back to retailers who have been stuck in a vicious cycle of discounts for years. Such constant promotions have eroded profits.

“Even with increased labor costs and increased supply chain costs, retail profits have been very good,” said Ken Perkins, president of Retail Metrics LLC, noting that when the pandemic hit, it was as if “the sky was going down and retailers would never be able to.” You see profit again.”

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