Will inflation and supply chain issues impact holiday shopping? – News
Will this holiday season be harder to shop for or more expensive? Three experts from the Collat School of Business give tips and tricks for navigating holiday shopping.
Media contact: Alicia Rohan
When the leaves change, the air crisps and the calendar rolls over to November, the inundation of advertisements and targeted messages about holiday gift shopping begins. In a season marked by cross-checking prices, allocating spending on items and loved ones, and tracking gifts as they arrive one by one, many are worried about what shopping this holiday season means with potential product shipping delays and increased prices reflective of inflation taking hold.
Experts from the University of Alabama at Birmingham Collat School of Business weigh in on hot topics and questions regarding pricing, shipping and budgeting for holiday shopping this season.
Will inflation impact prices of items?
The impact that rising costs may have on holiday shopping is paramount for many this year. According to Ben Meadows, Ph.D., assistant professor of economics, it is possible that many will see sticker shock on holiday gifts, but it is also dependent on what they are buying.
“For instance, consumer electronics have actually deinflated over the past year, while apparel has increased in prices year over year at 5 percent, which is more than usual — though this is nothing compared to the large swings we’ve seen in food prices,” Meadows explained.
Because of rising food costs, Meadows explains that, Black Friday aside, the highest prices the average American may see on their bill most likely will relate to cooking a big Thanksgiving meal more than gift purchases.
Meadows notes that year-over-year, inflation — the change in consumer price index — for each subset of goods has continued to increase, which means that the prices we are seeing now are the new normal for the future.
“Typically, we think of inflation as ‘cooling off’ rather than ‘falling off,’ since we are looking for price-stability,” Meadows said. “So ideally, these costs would be the new standard moving forward, rather than having any more upward swings in price.”
Will there be supply chain issues this holiday season?
In the wake of the first couple of years of the COVID-19 pandemic, most consumers in the United States and around the world are accustomed to shipping delays and supply chain issues. Are more clogs expected this shopping season?
“Companies seem to have refocused their energies on their supply chains from cost efficiencies to making sure their supply chains are resilient and agile. That is, they worked hard to make their supply chain flexible enough to respond to rapid demand changes where they can quickly find alternative suppliers,” explained Thomas DeCarlo, Ph.D., Ben S. Weil Endowed Chair of Industrial Distribution. “For example, some larger retailers have resorted to using costlier air freight or even chartering entire cargo ships themselves. They have been storing goods in their own warehouses or renting space to make sure there’s enough product available to meet the holiday demand.”
“Don’t wait until the last minute to shop. In fact, it would be a good idea to get the bulk of shopping done prior to December, if possible,” DeCarlo urged.
However, as DeCarlo explains, these changes and the fact that shipping rates have significantly increased have forced many manufacturers to make hard decisions about what to transport, which will lead to fewer consumer choices on the shelves.
“The most recent retail inventory data available indicates retailers have just over one month of inventory on hand, so as a result, product availability — particularly for larger, bulkier products that take up more space — could be a factor this shopping season, similar to the height of the pandemic,” DeCarlo noted. “Overall, the majority of inventory data I have seen suggests retailers may have a difficult time keeping shelves stocked with the ‘normal’ assortment of products as we move closer to Christmas.”
So, what does this mean? Do not wait until the last minute. In fact, it would be a good idea to get the bulk of shopping done prior to December, if possible, DeCarlo urges.
How can I save money when buying holiday gifts?
Top of most peoples’ minds is how can they save money when doling out funds to purchase holiday gifts for many of the people in their lives.
“It’s helpful to create a special holiday budget just as we would a monthly budget,” stressed Stephanie Yates, Ph.D., Regions Bank Endowed Professor and chair of the Department of Accounting and Finance. “Budgets are even more important when prices are high.”
According to Yates, it is critical to determine how much you want to spend on decorating, entertaining, gift giving — whatever you imagine you could spend money on this season. She adds that it is key to also make a list of all the people for whom you wish to buy gifts and set a budget for each person or category.
If money is tighter this season, Yates suggests considering experiences versus tangible gifts and/or considering an alternative celebration — like volunteering — as a way to celebrate the holiday season.
“I generally think that we sometimes put too much pressure on ourselves around the holidays,” Yates said. “When preparing, it might be useful to think about what is most important to you and those you love and focus on those things.”