Shipping concerns for holiday shopping season are real, but the consumer is bigger: Former HBC CEO
With 2021 winding down, the all-important holiday shopping season is fast-approaching. This year, retailers have a host of problems to contend with, but one prominent retail industry expert thinks those concerns will be offset by robust consumer demand.
“The concerns are real, but the consumer is bigger than all of them put together,” said Jerry Storch, founder and chief executive officer of Storch Advisors and former Hudson’s Bay Company chief executive, in an interview. “The consumer has been on fire.”
“The consumer has money, they want to spend it, COVID is trending down… it’s true there are issues, but right now the consumer is strong and they want to shop and they’re shopping in incredible numbers.”
This is the second holiday shopping period of the COVID-19 era. In addition to the virus itself, the risks of a wider outbreak and varying business restrictions, this year there are additional potential disruptions including labour shortages, supply chain issues as well as concerns about runaway consumer prices.
Retail executives are well aware of the risks, said Storch, but he thinks consumer demand will ultimately lead to a profitable season for those who play their cards right.
In anticipation of these headwinds, staffing is the top priority for many retailers, said Storch, adding that many companies have been offering big wage increases and various perks in order to keep stores staffed.
On potential shipping delays, he said some retailers are even chartering their own ships in order to get goods in time for the shopping boom.
On Tuesday, the U.S. Commerce Department revealed that the trade deficit widened to a record US$73.3 billion.
“It isn’t that there aren’t a lot of imports,” said Storch. “It’s just that demand is so freaking high, they can’t process it all.”
“Sure, there’s some COVID overhang at ports in Vietnam and China, but the big issue is there’s so much demand that it’s hard to move all the goods.”
Shop early, is the message from the former retail executive. Consumers may not be able to get their hands on the hottest toy of the season, but there will be goods available.
As far as who will win big this holiday shopping season, Storch said look to the big box retailers with a strong online business, while adding he is moderately concerned for department stores.
“All you have to look at is who was winning before the pandemic, because those fundamentals are starting to re-exert themselves.