Consumers Face 20% Price Increase During Holiday Season

0
Consumers Face 20% Price Increase During Holiday Season
justynafaliszek / Pixabay

According to a Salesforce (NYSE:CRM) study on consumer insights and predictions for the 2021 holiday season, digital sales will soar to $1 trillion globally amid a 20% rise in costs for consumers. Supply chain restrictions and labor shortages are the culprits.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q2 2021 hedge fund letters, conferences and more

Corsair Took A Hit From Small-Cap Underperformance In Q3; Says Evergrande Not The Next Lehman Brothers

Corsair CapitalCorsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More

Digital Sales Record

In a virtual press conference, Rob Garf, vice president and general manager of retail at Salesforce, said online sales growth is expected to tail off compared to last year’s record-breaking 50% surge.

Building on a growing trend before the pandemic, digital shopping habits have been reinforced during COVID-19 and will persist and drive total sales to record rates.

According to a release, Salesforce predicts a 7% YoY overall growth in global digital commerce for November and December –down from 50% YoY growth in 2020– and a 10% growth in the U.S. specifically, down from 43% YoY last year.

Further, “Total digital sales are expected to reach a record high of $1.2 trillion globally and $259 billion in the U.S.,” while “Digital commerce growth will be driven by a 20% rise in consumer prices despite fewer global (-2%) and U.S. (-4%) holiday orders expected.”

“With persistent global supply chain disruptions, retailers must draw consumers to their online and physical stores early in the season to fulfill demand and capture holiday spending,” Graf said.

Fewer SKUs

Manufacturing capacity, logistics costs, and labor shortage have exerted a big impact on retail prices and are bound to affect consumer purchase habits in the holiday season ahead. This means the U.S. retail industry is predicted to report $223 billion in extra costs.

Consumers are also likely to face a 20% increase in prices, while global “buy now, pay later’’ usage is bound to represent 8% –$96 billion globally and $20 billion in the U.S.– of online orders, “up from 4% of orders during the 2020 holiday season,” the study says.

In terms of shipping, Salesforce anticipates that the number of delayed packages will plunge 94% to 40 million, down from 700 million last year.

“Retailers are responding by consolidating Stock Keeping Units (SKU),” the release said, as online product catalogs are expected to wither by 5% over last year as supply chain challenges continue to play out.”

Salesforce is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.

Updated on

No posts to display