Retailers Opt to Hike Prices in Face of Supply Chain Issues: Study
November 10, 2021
(Supply Chain Dive) Much as consumers and businesses have pined for a return to "normal," 2021 has brought surprises and challenges of its own.
While last year's holiday season took place under a cloud, with COVID-19 raging out of control in the U.S., this year consumers in many areas have reasons to feel safe shopping in person and visiting family, with vaccines widely distributed and cases falling overall from their most recent peak in September.
Vaccines, job upticks and government stimulus have all led to a demand surge this year. Going into the holidays, retail sales are so strong that even a disastrous, sudden slowdown in sales in the latter months of 2021 would still make for a record or near-record season, according to Wells Fargo analysts. Taking challenges into account, that team predicted an 11% year-over-year sales increase for the holiday season, while Deloitte has estimated a 7% to 9% increase while AlixPartners has projected a 10% to 13% increase.
Here are some highlights:
Going into the holidays, 98% of surveyed retail executives said they are experiencing supply chain issues, according to a new study from First Insight and the Wharton School's Baker Retailing Center.
A full 100% said that supply chain disruption will affect the upcoming holiday season "significantly or somewhat" and will last at least through 2022.
To mitigate increased costs from the challenges, 59% of executives said they were increasing product price or shipping costs for consumers, and 36% were taking a margin hit to keep prices level. Just 2% did not anticipate cost increases on the company, according to the study.
Story first published on Retail Dive. Written by Ben Unglesbee, Sr. Reporter. Cover image by Madison Kaminski.
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