Santa can expect a bumpy ride this holiday season as glitches in the supply chain drive down retail inventory and drive prices up.
That’s expected to translate to record sales for merchants, with shoppers spending a collective $859 billion, according to a forecast by the National Retail Federation (NRF), a Washington, D.C.-based trade group. That’s a hike of 10.5%, more than double the 4.4% average annual increase over the past five years.
Online sales will get a boost, too, as consumers continue their pandemic practices of placing orders for curbside pickup or home delivery. The NRF expects e-commerce sales to increase as much as 15% to $226.2 billion. That’s up from $196.7 billion in 2020.
Despite consumers’ willingness to spend, they will find many items on their gift lists are in short supply. A few of the notables:
- Video game consoles are in especially short supply. Retailers report that PlayStation 5 and XBox are selling out within an hour of arrival.
- Artificial trees are scarce, due to delivery lags in raw materials used to make them. Drought in the Pacific Northwest is drying up supplies of live trees.
- Nike and Adidas athletic shoes fell a step behind in production when manufacturing was halted in factories in Vietnam at the height of the pandemic.
- Turkeys are being gobbled up early this year amid reduced supply. That’s especially impacting the supply of smaller birds, as concerns about travel reduce the number of celebrants around the table. Blame labor shortages at poultry farms, meatpacking plants, warehouses, truckers and ports. Aluminum, plastic and other packaging materials are becoming scarce as hen’s teeth.
The cost of shipping containers has more than quadrupled in the past year, impacting which goods merchants are choosing to import. This time last year, rates from China to California were $3,847 per 40-foot container. Now, the same container costs $17,377 to ship, according to Freightos, an online freight marketplace based in Hong Kong.
What makes it into the container is a matter of economics. Smaller toys made in China will be easier to find in U.S. stores because more of them will fit in a container. Big stuffed animals and toy trucks are less likely to make it to market because they are more expensive to ship, meaning profit margins are slimmer.
At Christiana Mall, retailers already are stocking up, flexing their entrepreneurial muscles to find merchandise as the holiday press is starting earlier this year. Merchants are in a hiring frenzy, with more than 1,000 positions available for holiday help at the regional super mall. Nationwide, the NRF forecasts retailers will hire between 500,000 and 665,000 seasonal workers, up from 486,000 seasonal hires in 2020.
Steven Chambliss, the mall’s general manager, said retailers are casting a wider net to fill openings, including tapping the teen market. For the first time in years, many stores are hiring sales associates younger than 18.
Although foot traffic has increased to near pre-pandemic levels, it’s shaping up to be an unusual season at the state’s highest-volume shopping center. Christiana has long been a magnet for international shoppers, especially consumers from Asia, drawn by Delaware’s status as a tax-free shopping haven.
“For years, shoppers would come in on buses for lunch, dinner and shopping at Apple and our other stores,” Chambliss said. “This year, our international shopper is not here at all.”
Every available retail space at Christiana is filled, including such regular holiday pop-ups as the Hickory Farms store. “We had more people looking for space than we had space to give them,” he said.
“Shoppers have gotten used to restricted hours. We are finding that the people who want to avoid crowds tend to shop before noon."Christiana Mall General manager Steve Chambliss
The state’s highest-volume shopping center might be a bellwether for what consumers can expect throughout the retail sector. Instead of dramatically expanding hours, the mall will add an extra hour in the evenings starting Dec. 12, operating 10 a.m.-9 p.m., Monday through Saturday and 11 a.m.-7 p.m. on Sundays.
“Shoppers have gotten used to restricted hours,” Chambliss said. “We are finding that the people who want to avoid crowds tend to shop before noon and many of them feel more comfortable wearing their masks.”
Chambliss noted that profit margins likely will be the best for retailers in years. Macy’s and Gap already have announced they will be offering fewer deals this year. Mailing packages to friends and relatives will cost more, too. The U.S. Post Office initiated temporarily rate hikes on Oct. 3. FedEx tacked on a fuel surcharge on Nov. 1. UPS announced a 5.9% increase.
That said, shoppers have fewer brick-and-mortar stores to patronize. A number of national and regional retailers, including Pier One and Steinmart, went out of business during the pandemic. The arts-and-crafts destination A.C. Moore is no more. On the small business scene, independent retailers, including Bel Boutique in Dover and Stubborn Soul in Middletown, switched from brick-and-mortar stores to selling online.
Pam Katzenstein of Wilmington says she has been checking items off her gift list for weeks, shopping early and not waiting for bargains. “I’m paying for peace of mind,” she said.
She isn’t the only consumer who started buying well before Black Friday. With an uncertain supply chain, 27% of holiday shoppers resolved to start purchasing gifts before the end of September, said a survey by CreditCards.com; 13% started bagging gifts in August.
Katzenstein also is among the shoppers who have stoically internalized that prices are higher this year. Like many unpleasant realities of the pandemic, consumers are accepting increased costs and moving on, at least in the short term. That includes the food and drink hosts are buying as more people entertain in their homes, although large parties have not yet rebounded to pre-pandemic levels. The Food and Agricultural Organization (FAO) reported that global food commodity prices spiked 31.3% in the 12 months through October. That’s the highest rate in 10 years.
The NRF’s chief economist, Jack Kleinhenz, is concerned about inflation. But he says many consumers are prepared to absorb higher costs for gifts because they have built a cushion of savings, thanks, in part, to government stimulus payments.
“Households have increased spending vigorously throughout most of 2021 and remain with plenty of holiday purchasing power,” Kleinhenz said in a statement.
Although the bargains aren’t as bountiful, there are still deals to be had. This weekend, Target is discounting the iconic Kitchen Aid stand mixer in retro ice blue for $220. Walmart is holding a pre-Black Friday sale Nov. 10-12, offering a Shark robot vacuum priced at $500 for $288. A Samsung Galaxy Tab A7 notebook computer is $139, marked down $80. Barbie’s Dream Camper is $60, marked down from $90.
