Supply chain disruptions, rising costs can mean a tougher holiday season

New Ideas in MarketingEssential news for marketers, summarised by YouGov
August 13, 2021, 3:03 AM GMT+0

Meeting consumer demand could be a challenge for retailers this holiday season given supply chain and distribution stresses.

As the COVD-19 Delta variant looms over the holiday season, US consumers' concerns about safety and security have grown, leading to outdoor shopping apprehensions. This, combined with the disrupted supply chains, and prices of commodities like gas (up 24.4%) and food (up 3.4%) has surged the consumer-price index (CPI) to 5.4% in June and July, due to inflation.

Empty shipping containers are being held up in ports where they are unable to restock, which has led to a supply shortage. As retailers will focus on meeting demand in primary markets first, secondary and tertiary ones will see lesser inventory. While retailers could prompt consumers to shop in-stores for holidays early this year, the threat of the virus can drive online shopping.

However, this could mean lower profit margins for retailers due to increased shipping costs. As long as the Delta variant threat looms large, retailers can expect infrequent and shorter in-store visits from customers. The author is of the opinion that these issues may continue for the rest of the year.

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