For months, retailers and experts have had one message for consumers: Get your Christmas shopping done early, because supply chain tangles show no sign of letting up. And as the calendar flips from October to November, data show that nearly half of consumers will start their holiday shopping before Thanksgiving this year.
But with the National Retail Federation (NRF) projecting that holiday spending will reach record levels this year, some industry watchers are wondering if supply chain issues may have been overblown. Sure, around 170 ships are waiting to dock in Long Beach and Los Angeles ports in California, and executives have spent ample time on quarterly conference calls discussing how they’re navigating longer transit times. But using low or “limited” supply is an age-old sales tactic to get consumers in the door faster.
Matt Powell, senior sports industry adviser for The NPD Group, noted on Twitter last week that many brands are warning of weak sales because of supply chain logistics, but few retailers are providing similar warnings.
Anyone notice that many brands are warning of weak sales due to supply chain logistics, but few retailer are making the same warnings? Most retail predictions are highly postive also.
— Matt Powell (@NPDMattPowell) October 26, 2021
In a call with reporters last week, NRF President and CEO Matthew Shay said this discrepancy is likely because while there may be shortages in multiple categories in the coming weeks, consumers will still be motivated to keep shopping for replacement goods.
“Not only have retailers evolved, adapted their behavior for the environment, but so have consumers,” Shay said, pointing to the increased number of people saying they’ll be starting their holiday shopping earlier this year.
The NRF is predicting between 8.5% and 10.5% increase in retail sales in November and December, ranging from $843 billion to $859 billion spent this holiday season.
“We’re looking forward to a strong season,” Shay said. “We know consumers have the savings and the financial firepower to meet their desires and needs for the season.”
Shay also noted that over the last two years, retailers have made investments in “perfecting and improving the digital experience for consumers,” bolstering fulfillment options through buy online, pickup in-store (BOPIS), curbside pickup and same-day delivery as well as wider adoption of more payment options such as buy now, pay later (BNPL).
“And, of course, engagement in social media and the use of other sorts of technologies to keep consumers engaged have created an environment in which retailers are in a much healthier position this year than ever before to use all of the assets at their disposal,” Shay said.
PYMNTS research, conducted in collaboration with Kount, found that 87% of consumers plan to shop online during the holiday season, a 10 percentage point increase versus last year. Additionally, 48% are starting their holiday shopping before Thanksgiving, with 25% planning to begin on Black Friday.
To be sure, as the pandemic continues to wane and consumers become more comfortable again with pre-pandemic patterns, some spending is shifting from goods to services, as noted by Amazon Chief Financial Officer Brian Olsavsky during the company’s earnings report last week.
Shay said, however, that the NRF sees a correlation between the service side of the economy and retail, especially as stores increasingly find ways to make brick-and-mortar more of an experience than just endless rows of shelved merchandise.
“Whether you’re going to a family event, a holiday event, a sporting or an entertainment event, there’s a retail portion of that event,” Shay said. “And so, our view is there’s going to be a way to benefit from the return to more active lifestyles.”