Consumers Face 20% Price Increase During Holiday Season

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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.

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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.

Cristian Bustos is senior editor for ValueWalk.com. Previously, he was the news correspondent in Germany for Colombian radio broadcast Blu Radio, where he covered the 2017 German federal election and the 2017 G20 Hamburg summit. He was also public relations consultant to EY and HAYS, and has covered a wide range of topics including business, finance, and international relations, as well as verticals such as automotive, aerospace and renewable energy. Email him at [email protected]
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