A Strong Holiday Season Is Expected but Will There Be Enough Inventory?

October 1, 2021


Holiday retail sales forecasts are dribbling in and to no one's surprise, e-commerce will lead year-over-year growth estimates. According to Deloitte’s annual holiday retail forecast, holiday sales will total $1.28 trillion to $1.3 trillion during the November to January timeframe up 7% to 9% year-over-year. Deloitte also forecasts that e-commerce sales will grow by 11% to 15%, year-over-year, during the 2021-2022 holiday season. This will likely result in e-commerce holiday sales reaching between $210 billion and $218 billion this season.

Meanwhile, Salesforce published its holiday retail sales forecast. A 7% year-over-year overall growth in global digital commerce (10% growth for the US) is expected for November and December. Total digital sales are expected to reach a record high of $1.2 trillion globally and $259 billion in the U.S.

However, Salesforce expects digital commerce growth will be driven by a 20% rise in consumer prices despite fewer global (-2%) and US (-4%) holiday orders expected.

"While last holiday was defined by the last mile, this year is expected to be dominated by the first mile," said Rob Garf, VP and GM of Retail, Salesforce.

Indeed, Salesforce expects the US retail industry will face an extra $223 billion in the cost of goods sold this holiday season.

Many retailers have been experiencing higher freight costs for a while now as sporadic COVID-19 outbreaks at Asian manufacturing facilities, ports, and airports slowed down supply chains and ultimately delayed the delivery of a number of goods to stores.

Costco Wholesale CFO Richard Galanti noted on the company’s recent earnings call with analysts, Sept. 24) that “inflationary factors abound: higher labor costs, higher freight costs, higher transportation demand, along with container shortages and port delays, increased demand in certain product categories, various shortages of everything from computer chips to oils and chemicals, higher commodities prices.”

Another retailer, Bed, Bath and Beyond told Bloomberg, “Things just rapidly accelerated in terms of costs by month.” Furthermore, the CEO, Mark Tritton, added that the company is having trouble getting orders completed and on shelves, with delivery delays in the range of 30 to 45 days. As a result, for the three-month period ending August 28, Bed, Bath and Beyond’s total enterprise gross margin of 34% was negatively impacted by freight cost increases of 360 bps versus an anticipated increase of 240 bps.

As retailers struggle to replenish inventory, John Haber, President of Transportation Insights’ Parcel division, recently told Supply Chain Brain that consumers need to shop early. “That’s my best advice,” Haber said.

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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A Strong Holiday Season Is Expected but Will There Be Enough Inventory?

October 1, 2021


Holiday retail sales forecasts are dribbling in and to no one's surprise, e-commerce will lead year-over-year growth estimates. According to Deloitte’s annual holiday retail forecast, holiday sales will total $1.28 trillion to $1.3 trillion during the November to January timeframe up 7% to 9% year-over-year. Deloitte also forecasts that e-commerce sales will grow by 11% to 15%, year-over-year, during the 2021-2022 holiday season. This will likely result in e-commerce holiday sales reaching between $210 billion and $218 billion this season. Meanwhile, Salesforce published its holiday retail sales forecast. A 7% year-over-year overall growth in global digital commerce (10% growth for the US) is expected for November and December. Total digital sales are expected to reach a record high of $1.2 trillion globally and $259 billion in the U.S. However, Salesforce expects digital commerce growth will be driven by a 20% rise in consumer prices despite fewer global (-2%) and US (-4%) holiday orders expected. "While last holiday was defined by the last mile, this year is expected to be dominated by the first mile," said Rob Garf, VP and GM of Retail, Salesforce. Indeed, Salesforce expects the US retail industry will face an extra $223 billion in the cost of goods sold this holiday season. Many retailers have been experiencing higher freight costs for a while now as sporadic COVID-19 outbreaks at Asian manufacturing facilities, ports, and airports slowed down supply chains and ultimately delayed the delivery of a number of goods to stores. Costco Wholesale CFO Richard Galanti noted on the company’s recent earnings call with analysts, Sept. 24) that “inflationary factors abound: higher labor costs, higher freight costs, higher transportation demand, along with container shortages and port delays, increased demand in certain product categories, various shortages of everything from computer chips to oils and chemicals, higher commodities prices.” Another retailer, Bed, Bath and Beyond told Bloomberg, “Things just rapidly accelerated in terms of costs by month.” Furthermore, the CEO, Mark Tritton, added that the company is having trouble getting orders completed and on shelves, with delivery delays in the range of 30 to 45 days. As a result, for the three-month period ending August 28, Bed, Bath and Beyond’s total enterprise gross margin of 34% was negatively impacted by freight cost increases of 360 bps versus an anticipated increase of 240 bps. As retailers struggle to replenish inventory, John Haber, President of Transportation Insights’ Parcel division, recently told Supply Chain Brain that consumers need to shop early. “That’s my best advice,” Haber said.  


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts has united with Transportation Insight to become North America’s #1 provider of small parcel management and optimization services.  Our team of best-in-class analysts employs cost modeling techniques to help clients optimize their supply chain spend, reducing costs by 20% or more.  Our approach is non-invasive to daily supply chain operations as we employ unparalleled market intelligence and proprietary cost modeling technology, targeting hidden costs and identifying savings opportunities. After establishing the success criteria, SME leverages proven project plans, data warehousing, and milestone documents to ensure an optimized and implementable solution. We build strong business cases based on your data to negotiate better terms, pricing, and service for our clients. We deliver your competitive edge. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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