Retailers Face Supply/Demand Shortfalls This Holiday Season

Article courtesy of PYMNTS here

Shortages of popular items like clothing, electronics and more are likely to cause trouble for U.S. retailers during the holiday shopping season, the Financial Times (FT) reported.

The shortages come from an unexpected surge of customer demand, which took retailers by surprise after they had cut orders for new merchandise in the spring as countrywide lockdowns were starting and the job market was bottoming out. Retailers typically place orders for the holiday season, widely considered the prime time for shopping in the U.S., in the spring. But most of them assumed shopping would be mostly down this year, according to FT.

Rebecca Minkoff, co-founder of the eponymous fashion brand known for its pricey handbags and leather backpacks, said the company is "scrambling for product," FT reported.

“Our wholesale partners are calling again," she said, according to FT. "They’re like, ‘Can we get some stuff?’”

At the end of July, an analysis from data provider Sentieo showed that 33 of the largest U.S. retailers had $119 billion in inventory, which was 9 percent lower than the previous year, FT reported. But those companies reported strong recoveries in spending in the second quarter. Sentieo data showed those 33 companies with $292 billion in sales combined, a 6 percent rise from 2019 numbers.

But the initial prudishness the retailers showed as the pandemic was beginning could prove to be the right move after all, if the economy worsens again and stimulus money doesn't come through from the government, FT reported.

The holiday season is approaching fast with the pandemic still ongoing. PYMNTS reported that this year's holiday shopping season could see a shift to digital to prevent the spread of the virus, particularly on Thanksgiving weekend as the major shopping rush is expected to begin at large retailers.

Peggy Alford, PayPal’s executive vice president of global sales, said some keys to the season could be using savvy digital tools to reduce friction at digital checkout, and offering numerous payment options so customers feel in control of their spending.