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Retailers Face Unexpected Challenges in Holiday Shopping Season Amidst Rising Inflation

The holiday season is usually the busiest and most profitable time of year for many retailers. But this year, due to rising inflation across the country combined with consumers looking for a non-COVID-19 impacted shopping experience, retailers are facing a range of unexpected challenges.

Recently, two major department stores—Nordstrom and Macy’s—surprised analysts by not blaming their surplus of outdated Sperry shoes for cutting back on their annual earnings forecasts. Meanwhile, luxury brands like Bloomingdale’s and Blue Mercury saw an increase in sales last quarter despite the pandemic. Even Bugatti sold out of all 99 models of its new $5 million car. However, according to Morning Consult, middle-class households have become the most price-sensitive group as of late. In July 2021 alone, seven percent fewer households making between $50,000–$99,000 annually reported that they had money left over after monthly expenses.

Given these circumstances, it’s no surprise that many retailers are worried about what’s ahead when it comes to meeting sales goals during the holiday season. This is especially true given that prices may continue to rise amid increased demand from shoppers seeking special gifts or experiences while trying to remain safe during COVID-19 restrictions. This could mean that customers may need to be more strategic when it comes to their purchases if they want to stay within their budget and still get everything they need on their list.

At the same time, retailers may also need to be more creative when it comes to marketing and promotional activities if they wish to reach customers who might otherwise be unwilling or unable to purchase certain items this holiday season due to rising prices or other financial limitations caused by the pandemic. For example, some stores may offer discounts on certain items or bundle deals in order to help make products more affordable for those on a tight budget; others may opt for more unique promotions such as organizing virtual shopping events or offering free shipping with certain orders in order to draw more attention from budget-conscious customers who still want something special from them during this festive time of year.

Ultimately though, whatever strategies retailers decide on going forward will need careful consideration as rising inflation levels combined with consumer desires for a non-Covid interrupted celebration could have an impact on both retailer profits and consumer spending this holiday season — a situation which will require thoughtful adaptation and creativity if retailers wish to successfully navigate through these uncertain times ahead and reap desired rewards once again come January 2021.

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