The retail industry appears to be heading for one of the most dangerous holiday periods since the Great Recession of 2008-2009. As Isaac Larian, CEO of toy maker MGA Entertainment, recently said Bloomberg,
âAnything that can go wrong goes wrong at the same time. “
Factories that make products essential to the seasonal income targets of many retailers are either closed due to the pandemic or are well behind schedule. The finished products sit in containers in congested ports, waiting to be unloaded on trailers for which there are not enough truck drivers. “Out of stock” notices began to proliferate on retail websites.
Meanwhile, the facts on the ground are starting to betray economists who have reassured us – so far – that this year’s skyrocketing inflation, now above 5%, is just one an aberration that will run out of gas once the pandemic is over. Which one will beâ¦ when?
The indicator of consumption trends are fuels. It is the only product that everyone buys on a regular basis. After a year of steadily rising prices, a recent jaw-dropping jump sees gas at least 50% higher than a year ago, and no sign the fever is ready to go.
If you want to know what consumers weary of the pandemic think about the future, volatile gasoline prices are a reliable indicator.
The other reliable indicator is food. Prices are skyrocketing. Meat, poultry and other staples are on the rise, some in double digits. And the biggest expense for most households, rent, has gone up in just 10 months in major cities by 15 to 25 percent.
The prevailing wisdom during much of the pandemic had been that the consumer was inundated with money and just wanted to busy spending it. Not so much now. In fact, the most recent Treasury Department report found that the savings rate as a percentage of income, which skyrocketed in April 2020 when stimulus checks were first issued, has returned to its peak. pre-COVID-19 level.
How deeply consumer attitudes are changing is reflected in a new Quinnipiac University survey: 81 percent of Americans think life won’t be getting back to normal anytime soon. One in four is convinced it never will be.
Fifty-three percent of respondents say they feel unsafe trying products in locker rooms, 49 percent feel unsafe trying on shoes, and 71 percent say they feel unsafe trying on shoes, according to consumer research conducted by First Insight. 100 feel in danger of testing beauty products in stores. Fifty-six percent of those polled said they did not feel safe working with a salesperson, a 30 percent increase from the last survey. However, that’s not necessarily bad news for retail, as online shopping continues to rise, even at below single-digit growth rates than at the height of the pandemic.
Meanwhile, the business world, already marked by the pandemic, digs for a long period of trench warfare. According to a the Wall Street newspaper report, âMany companies said they expected higher prices and supply shortages for another year or so.
A year ago, consumers were extremely concerned about the cleanliness of retailers, with price being only a major concern of one in four. Today, according to a recent survey, 80% cited price as their most important consideration when deciding where to shop.
Thanks to Amazon’s raptor algorithms, competition on this basis is tricky. Great customer service is the most powerful weapon retailers can deploy to retain their customers.
But how do you deliver great customer service when millions of jobs are begging? Customers notice that, as we recently saw, there is only one person who manages a large-scale CVS site; or it takes five minutes of wandering around to find someone at a Kohl’s who can direct you to the Amazon return office.
Finally, survey after survey, consumers are not in such a consuming state of mind anyway. According to advertising agency Momentum Worldwide, a survey of 3,200 consumers found that 76% of them “would rather spend their money on experiences than on physical items.” The First Insight consumer study also found that among those surveyed who did not want to be vaccinated, 90% indicated that they would not consider getting the vaccine to ensure access to restaurants and to businesses.
Stagflation is the dirty word that describes the confluence of stubborn inflation, high unemployment and stagnant demand. The current conditions may not be the classic formula, but for retailers it may be too.
Retailers need to redouble their efforts in consumer research and ensure a positive customer experience. However long this period of turmoil lasts, the companies that will and succeed will be those that invest in competitively priced, research to understand their customers, and make the omnichannel online and hybrid shopping experience a game. child to stay ahead of the competition.