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Supply chain problems will hit consumers in the wallet during the holidays, with Salesforce.com Inc. forecasting a 20% increase in prices for the shopping season and beyond.
The global supply chain has been tied in knots for a variety of reasons linked to COVID-19, including bottlenecks at the ports, factory closures overseas, and higher costs for things like containers to move merchandise.
As early as this summer, there were already forecasts about the impact the supply chain backup could have on toys.
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“As consumers contend with these higher prices, global ‘buy now, pay later’ usage will likely account for 8% ($96B globally and $20B in the U.S.) of online orders this holiday season, up from 4% of orders during the 2020 holiday season,” the Salesforce
CRM,
report found.
Salesforce is also forecasting a 7% increase in digital sales this year, with the total expected to reach a record $1.2 trillion, after what the organization calls a “historic” 2020 season that also exceeded $1 trillion.
Digital sales in the U.S. are forecast to reach $259 billion.
Still, Salesforce is forecasting for a 2% decline in global orders and a 4% decline in U.S. orders.
“While last holiday was defined by the last mile, this year is expected to be dominated by the first mile,” said Rob Garf, vice president of retail at Salesforce, in a statement.
“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.”
On Wednesday, Target Corp.
TGT,
announced its jump start to the holiday season with its Deal Days event starting Oct. 10. It’s also extending its price matching program.
And many retailers and other organizations have announced seasonal hiring plans to help manage a spike in online shopping.
Salesforce says bricks-and-mortar locations will play a critical role in holiday digital strategies with six out of 10 global orders getting a helping hand from a store, whether fulfilling an order or helping to place it.
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Deloitte forecasts a 7% to 9% increase in holiday sales this year, with sales expected to total $1.28 trillion to $1.30 trillion during the November to January period.
The SPDR S&P Retail ETF
XRT,
has rallied 49.4% for the year to date, outpacing the benchmark S&P 500 index
SPX,
which is up 16.5% for the period.
