Consumer demand for everything from household goods to the hottest holiday gifts is through the roof this year; however, the ability for industries to meet this unprecedented shopping rally has been lackluster so far. Since the beginning of the pandemic there has been concern over the supply chain that has turned into dread as we approach the holidays. The chances that stores are well stocked by next month are slim and retailers must prepare for the fallout. Many stores have chartered additional shipping vessels and pre stocked warehouses, yet others are still scrambling to fill those empty shelf spaces.

People could respond to this supply shortage in a variety of ways. We could see a situation where high demand leads to shoppers grabbing what little is available on shelves without much regard to desire. As we have mentioned before this outcome could be a windfall for smaller companies that got an early start to get their foot in the door with big box retailers. The downside is that this ‘anything goes’ shopping pattern skews spending numbers in an unrealistic way. This overbuying leads to erroneous demand and inflated prices which in turn creates additional shortages and higher prices that drives shoppers away. We can also expect to see fewer large discounts this year based on how things are playing out. The high demand low supply dynamic causes retailers to hold back on discounts with pent up consumers needing little incentive to go out and make a purchase. This also leads to earlier shopping as they are less worried about deals and more concerned with availability. The hope is that the supply chain is able to provide just enough for the predictions of a shopping boom to come true.

The supply chain issues retailers have been experiencing may also drive everyone to go online. Dedicated ecommerce retailers traditionally have an easier time stocking their digital storefronts than their physical counterparts. This also create opportunities for retailers, such as Walmart, who have made significant improvements to their online ordering systems. It would not be surprising to see many deals this holidays season push the public to order online in an effort to cover up the lack of products in stores. Direct to consumer shipping has had its own set of issues over the past year; however, this could provide some temporary relief to the supply chain. The worst-case scenario for all of this potential panic would be that shoppers completely withdraw. People might view higher prices, fewer products, and deals as a reflection of the economy. Despite the pent up demand, people could pull back and hold onto their money. In a similar fashion to over purchasing, this would throw off economic and spending forecasts, creating false values. This holiday season will be different than 2020 and possibly a total departure from preceding years as well.

The strength of the supply chain will be tested over the next few months. It has been on the minds of company executives and governors across the U.S and there is not a consensus on how to fix this issue. Ports and trucking companies have put out calls of more employees, although retailers can’t count on that to save them. Time is short; however, early holiday deals can spread out high demand and online storefronts can move the focus away from empty shelves. A high turnout for this holiday shopping season and record sales would demonstrate the resilience of consumers and the ingenuity of retailers.