Many US consumers heed warnings about shipping delays, pushing a large portion of the period’s normal profits into the first year
Many holiday shoppers heed warnings about shipping delays, taking away a greater portion of the season’s usual profits than earlier in the year. The Commerce Department is scheduled to release its report on Friday at 8:30 a.m. Eastern Time.
Retail sales are adjusted for seasonal changes, but not for inflation, so last year’s progress is affected by historically high price increases. The consumer-price index, the primary measure of inflation, rose 7% in December, the fastest pace since 1982.
Annual growth in retail sales for 2021 will be around 19%, a reflection of the sharp edge of consumer spending, in the wake of depressed sales last year during the worst economic period of the COVID-19 pandemic. Retail businesses are unlikely to see the same pace of growth this year, with consumer savings falling well below highs, and the O’Micron version is causing fresh disruption and keeping patrons away from restaurants and bars.
Referring to the 2021 performance, Neil Saunders, managing director of GlobalData Retail, said, “In any normal year you don’t see that much growth in sales.”
Due to supply-chain constraints, some retailers may end up with excess products that they expected to sell over the holidays but did not receive in time, resulting in discounts, according to economists. Another factor is expected to be an additional shift in spending from goods to services once the pandemic ends. During the pandemic, consumers have spent more on goods, while spending on services has remained below pre-pandemic levels. In November, before Omicron’s growth in the US, the balance began to shift back to services, with freight spending rising 0.1% while services spending climbing 0.9%.
Several large retailers this week said the Omicron boom and supply-chain disruptions weighed on holiday sales. lululemon athletica Inc.
and Abercrombie & Fitch Co.
Said their sales would be hit by the disruptions.
Lululemon chief executive Calvin McDonald said the company started the holiday season in a strong position, but COVID-19 led to limited staff availability, prompting the chain to reduce store hours in some locations Gone. Abercrombie chief executive Fran Horowitz said unexpected shortages of inventory in key categories due to port and transportation delays impacted sales.
“If we had inventory, we could have delivered sales within our previous limits,” said Ms. Horowitz.
For Paula Humphrey, general manager of Dawn’s Garden Shop in Colorado Springs, Colo., supply-chain problems have been both a boon and a challenge. She said sales at the garden center have been “over the top” since the pandemic began, with many customers citing grocery shortages and a desire to grow their own food to address the increased prices.
Founded more than four decades ago by her husband, Don Humphrey, to optimize her business due to shipping delays. They have had difficulty procuring manufactured garden materials, such as flagstones and fountains, because of the high demand and because their suppliers of flagstones are not able to hire guest workers from Mexico, as is usually the case.
“This year we are getting inventory so we will have it,” said Ms Humphrey. “Usually we would never order flagstone in January.”
Restaurants and bars have struggled to cope with the double whammy of disappointing service costs and high inflation.
“The cost of my cans and cereal has gone up, so I’ve shipped it to the consumer,” said John Linscum, co-founder of Turtle Swamp Brewing, a brewery and taproom in Boston’s Jamaica Plain neighborhood.
Mr. Linscom, who has a doctorate in biochemistry and has years of experience applying for government research grants in his prior career as an amyotrophic lateral sclerosis researcher, helped help with a Small Business Administration loan in the early stages of the pandemic. During this the brewery was kept open. and grants.
While distribution deals with grocers, including Whole Foods Market, as well as restaurants and bars around Massachusetts, have helped build his wholesaler business, he said he relies on cash flow from the taproom to pay for regular business expenses. are dependent.
“The ability for that weekly, monthly cash flow to pay utilities and biweekly payroll has been exhausted,” patrons refrained from eating and drinking because of the rise in Covid-19 cases.
Turtle Swamp recently instituted a vaccine mandate for customers two weeks before Boston’s citywide mandate, but said it would wait until the current wave of cases subsides a bit and the weather improves. Patrons are unlikely to return in strong numbers.
“The next six months will decide – there will be a wave of bankruptcies,” Linscum said. “The little guys can’t keep it up.”
—Suzanne Kapner contributed to this article.
Write Gabriel T. Rubin at [email protected]