SUMMARY: Product shortages are expected to continue well beyond this holiday season and include everything from bikes to cars as consumer confidence retreated in August to its lowest level since February 2021. With unemployment benefits starting to run out and COVID still out of control, this could be a very bleak holiday season.
This week I was expecting an important package via Federal Express. They sent me emails and text messages telling me it would arrive on Saturday, but that was inaccurate. When I inquired about the delivery, they responded that “they were overwhelmed with e-commerce packages”. What!?
I thought about getting a new bike since mine needs replacement. The lead time on the model I wanted was 267 days. Labor Day is usually a big sales day for auto dealers, but the chip shortage means many models are out of stock. In Target, I found many near-empty shelves, and even Amazon is saying that some items are not eligible for Prime because of stock issues.
A lot of reports have consumers flush with cash with others barely able to make ends meet. This holiday season could be gray at best for many consumers.
In the first-holiday shopping survey out of the gate, 22% of consumers said they plan to shop earlier this year, with 25% expecting to do most of their shopping before Thanksgiving and 10% before Halloween. The survey is from shopping rewards app Shopkick. But for the last three months, consumer inflation as measured by the CPI has crept up from 5% in May to 5.4% in June and July compared to a year ago. The last time it was so high was from June through August 2008, after which it leveled off to an average moderate rate of 3.8% and even declined in 2009 by 0.4%.
In addition to inflation, there is a problem with shipping containers. They are stuck in the wrong places with empty containers sitting in ports where they can’t be filled and returned to ports where they can. This container shortage is causing a doubling or tripling in the cost to ship products.
Given the Delta threat, consumers will make fewer and shorter shopping visits to brick-and-mortar retailers, especially indoor malls facing an extremely challenging holiday season.
Right now, consumers are looking for any good news to help them out of this funk. I expect that a lot of people are going to be unhappy. Gift-giving is a way to say “thank you” to family and friends, but gifts may be hard to come by.