Christmas is going to be great for stores, if their names are Walmart or Target
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Christmas is going to be great for stores
By Nathaniel Meyersohn, CNN Business
It’ll be a very merry Christmas for America’s biggest retailers.
Retail sales in November and December are expected grow between 8.5% and 10.5% this year compared with the 2020 holiday season, to a record of up to $859 billion, the National Retail Federation, a trade group for retailers, said Wednesday. The figure excludes car dealers, gas stations and restaurants.
But the forecast doesn’t account for the vastly different fortunes of small retailers versus large. Amazon, Walmart, Target and other huge chains have the muscle to minimize much of the supply chain chaos, inflation and hiring challenges plaguing the retail industry.
Federal stimulus payments to households and families since the onset of the pandemic, elevated household savings rates, and rising wages will propel consumer demand during the holidays, NRF predicted.
“Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger,” NRF CEO Matthew Shay said in a news release.
But while consumers may be ready to spend, it doesn’t mean that all stores will have the inventory they want in time and the employees to staff stores.
Big companies have taken steps to navigate port congestion, factory closures, a shortage of truck drivers and other supply chain difficulties.
Walmart, Target, Costco and other chains have chartered their own ships to deliver goods from Asia, stocked up on extra inventory, and relied on their deep pockets and broad supplier bases to adjust to supply constraints.
“Retailers are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this time of exceptional consumer demand,” said Shay in the release
Such options are too expensive and inaccessible for most independent shops. Additionally, small stores typically have less financial flexibility to absorb higher costs and keep prices down for customers than large competitors.
Walmart and Target “should gain share from smaller competitors this holiday that lack scale [and] face more shortages due to the challenging supply chain environment,” Bank of America analyst Robert Ohmes said in a research note on Oct. 11.
According to a recent survey by the National Federation of Independent Business, a lobbying group for small businesses, more than 35% of small business owners reported in September that supply chain disruptions have had a significant impact on their business. Another 32% reported a moderate impact.
“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” said NFIB Chief Economist Bill Dunkelberg.
Shay from NRF said on a call with reporters Wednesday that many mom-and-pop stores are “finding ways to compete successfully” against bigger competitors, despite supply chain woes. The bigger problem for shops in major cities, he said, was “the lack of return to office activities.”
Still, Shay acknowledged that small stores that “don’t have the relationships with suppliers will find challenges” this holiday season.
The-CNN-Wire
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