Consumers have lots of cash, but less to buy this holiday season
After more than a year of pandemic-related abstinence, people are in a spending mood this holiday season. The problem is there's going to be less stuff to buy.
Why it matters: Global supply chain logjams have left many retailers with empty shelves. And the bottlenecks are getting worse, not better, Bloomberg reports.
- For giddy consumers, that pent-up holiday excitement could turn into disappointment by December if they can't buy the toys and gifts they want.
- And for those lucky enough to snag the perfect gift, they'll likely pay more.
The big picture: After putting away extra savings for a year and a half, consumers say they will spend an average of $1,447 on gifts, travel and entertainment this year — 20% more than last year, according to PWC's holiday outlook survey.
- Even compared with the pre-pandemic 2019 season, spending will be up 13%, as consumers finally feel free to celebrate the holidays with family and friends.
Yes, but: There could be slim pickings of everything from toys and clothing to electronics and cars.
- It's the same mismatch of supply and demand hitting every aspect of our lives.
- As The Atlantic's Derek Thompson put it: "This is the Everything Shortage."
- E-commerce sales, which rose about 40% in 2020, are up another 38% so far this year but have flattened recently — a possible result of low inventories, per data from Bloomreach, a digital commerce software company.
What's happening: Some of the biggest U.S. retailers are finding ways around the inventory shipping delays to save their most important season of the year.
- Walmart, Target, Home Depot and Costco are among those chartering their own cargo ships to import goods.
- Some are also using air freight — which is far costlier — to try to stock shelves in time.
- Such moves will hurt retailers' profit margins — unless they jack prices way up — but companies don't want to miss out on consumers' big spending plans.
Yes, but: Smaller chains and mom-and-pop stores don't have such resources.
- "For retailers whose business is already not in great shape ... this could be kind of the last straw," said Brian Walker, Bloomreach's chief strategy officer.
Be smart: Experts are urging consumers to shop early for the holidays this year and consider creative shopping alternatives.
- Don't count on the fast e-commerce delivery you've come to expect.
- Order online, then pick up in the store — it's likely to be fastest (provided the item you want is in stock).
- Don't be embarrassed to buy everyone gift cards this year. They can be used later, when inventories are replenished.
- Consider shopping at thrift stores, which young people prefer anyway for their smaller carbon footprint.