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The holiday season will move to high gear, but challenges remain

New York — Backed by solid employment, healthy wage increases and significant savings, shoppers are returning to stores to get all kinds of merchandise.

But the big question is how low supply, rising prices, and staffing issues can make this holiday season feel uncomfortable.

Americans who are already tired of the social distance policy caused by the pandemic may be in a bad mood if they can’t check the items on the holiday wish list, or they are disappointed with the skimpy holiday discounts. maybe. Exacerbating the moody mood is the fact that many frustrated workers quit before vacation and leave businesses out of control during the busiest times of the year.

According to Aurelien Duthoit, Senior Sector Advisor at Allianz Research, this year’s Black Friday shoppers will pay an average of 5% to 17% more on toys, clothing, appliances, TVs and other purchases compared to last year. It is expected. On average, TV prices are up 17% from a year ago, according to research firms. This is because the discounts available apply to items that are already expensive.

Such frustration can curb sales during the holiday season, which should break records.

The National Retail Federation, the largest retail group in the United States, reported 8.5% vacation sales compared to the 2020 vacation period when locked shoppers in the early days of the pandemic spent money on pajamas and household items. Is expected to increase by 10.5% from. — Mainly online. Sales for the 2020 holiday season increased by 8.2%.

Neil Saunders, Managing Director of Global Data Retail, said: “It will be a little frustrating for retailers, consumers and workers. You will see a long line. Go to a messy store. There can be delays in collecting online orders.”

Jill Renslow, executive vice president of business development and marketing at Mall of America, the country’s largest mall, expects Black Friday’s customer numbers to be close to 2019 levels, with store tenants early in the season. He said he was seeing “power shopping.” However, she admits that the mall’s tenants are struggling to staff, and as a result, the center opens two hours later and closes one hour early on Black Friday.

“They (retailers) are doing everything they can to provide a great guest experience,” says Renslow. “But consumers need to be patient and know that the line can be a bit longer.”

Still, don’t underestimate the resilience of shoppers who have shown signs of wanting to celebrate their holidays after last year’s modest celebration.

Kathleen Webber, a 58-year-old college professor in Yardley, Pennsylvania, said she would return to a large family gathering for a vacation and spend last year’s vacation with her husband and three children alone before buying more gifts. rice field.

“We want to celebrate because everyone is so happy to be together,” said Webber, a big online shopper. However, fear of shortages led her to finish her holiday shopping by the end of next week. She usually waits until December 21st to complete her online purchase.

Retailers have also proven to be resilient.

Experts feared the death of department stores and apparel chains when the pandemic closed non-essential stores for several months in the spring of 2020. Many iconic retailers who were already suffering from bankruptcy, such as Neiman Marcus, JC Penny and Brooks Brothers, have been reorganized. Meanwhile, large retailers like Wal-Mart and Target, which were allowed to continue to operate, have become stronger and stronger.

However, since then, many retailers have returned to a healthier financial position. According to S & P Global Ratings, the percentage of US retailers in default jumped 20% last year, compared to 6% for all corporate issuers. This year it is less than 2%.

According to global research firm Coresight Research, US retailers have announced the closure of 5,057 stores annually, with 5,103 stores opened as of November 19. .. Coresight Research predicted that 25,000 stores would be closed last year in June 2020, but in reality it was just over 8,000.

The companies that survived the pandemic were also the ones that were able to pivot quickly. Many people switched from dressy to casual clothes, and suddenly a department store that didn’t offer services such as curbside pickups like Macy’s went on sale. Others have removed the place where they are losing their money.

Some of the changes that were inevitably introduced in 2020 include offering significant holiday discounts in early October to smooth out the peak of online orders, abolishing Thanksgiving store shopping, and more. It seems that it will continue, such as moving customers online instead of trading. ..

Also, the supply network blockage caused by the pandemic has reduced the inventory needed to meet shopper demand, but such shortages have also proven to be silver-lined. Lean inventories have regained some pricing power for retailers who have been trapped in a vicious circle of discounts for years. Such non-stop promotions have eaten up profits.

“Despite rising labor costs and rising supply chain costs, retail revenues were very good,” retailers never see profits again when a pandemic occurs. “

Black Friday shoppers wearing face masks will wait to enter the store in Glendale Galleria, Glendale, CA on November 27, 2020. Retailers will announce the informal start of the holiday shopping season on Friday, November 26th. In 2021, more people gathered than last year, when we took a step towards normalization. However, the effects of pandemics continue to weigh on businesses and shoppers.



The holiday season will move to high gear, but challenges remain

Source link The holiday season will move to high gear, but challenges remain

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