On the supply side: rosy retail prospects for many despite the Delta variant; clothes to benefit
Retailers across the country saw the full range in 2020 amid the COVID-19 pandemic – supply chain hiccups, reduced hours of operation, employee safety, record revenues, robust online growth and more attention to social, racial and equity issues.
Insider and retail expert Jan Kniffen, founder of J. Rogers Kniffen Worldwide Entertprises, said retail “couldn’t be better.” He said consumers are dying for deals, which bodes well for retailers like Nordstrom and those “on sale.”
“What does this suggest for the start of the school year and the holidays? Well the consumer is sitting on $ 2 trillion in excess savings, ”Kniffen said. “Unemployment is falling and hourly wage rates are rising. Credit card debt is not excessive. Asset wealth as measured by home values and 401 (k) balances are at all-time highs. The consumer has just found out that each of their children receives $ 300 per month for a period of time. This means that mom or dad can spend on the kids for the start of the school year.
Kniffen added that it will be the best back-to-school year he has ever seen. He insists that it is not just clothes for children. Families may have thought they bought all the electronics their kids needed last year, but Kniffen predicts 2021 will be another big year for electronics sales ahead of the school year.
The National Retail Federation expects back-to-school spending for K-12 children to reach $ 37.1 billion, up 9.4% from a year ago. Per capita spending is set at $ 848.90, up $ 59 more than last year for back-to-school items.
Kniffen said the strong back-to-school season sets the stage for more spending on fall clothing and a strong holiday season for clothing similar to the roaring 1920s.
Kniffen predicts that country and western clothing will be “hot” items this fall. The fashion craze is played out amidst pop culture influences. TV personality Kourtney Kardashian swapped flip flops for cowboy boots in recent social media posts. Prada’s bolero ties are seen around the necks of singers Nick Jonas and Quavo.
Kniffen said this trend could be good for American Eagle, The Buckle and Urban Outfitters, and retailers that carry the Levi brand. He expects the fashion trend to continue through the first half of 2022. Walmart, Amazon, Target and Costco could also be key market share winners in Western fashion. Kniffen said these 2020 winners won’t want to concede their share wins, and they will likely play on a large scale.
He said the fashion trend will help increase clothing sales through mid-2022, depending on the scale of the fashion. It could also be a catalyst for the growth of home decor sales to the benefit of many other retailers like Bed, Bath & Beyond and At Home.
Kniffen said the COVID variant is expected to get scarier before it sees it destroy holiday sales. Kniffen noted that given the improved vaccination rates and the greater number of terms that require it, he doesn’t see the Delta variant having much negative impact on holiday sales.
The first holiday sales forecast by eMarketer points to another record year with sales up 2.7% to $ 1.09 trillion. E-commerce sales are expected to reach $ 206.88 billion, up 11.3% and representing a record 18.9% of total vacation sales in 2021.
A recent report from Salesforce predicts that U.S. retailers will face additional costs of $ 223 billion for merchandise sold this holiday season due to large year-over-year cost increases for freight, manufacturing and labor. Salesforce predicts that retailers will pay $ 12 billion more for raw materials this year than during the same period in 2020. This is in addition to ocean freight spending in the second half of 2021 which is expected to increase by $ 163 billion. more than one year over the next. Salesforce said the additional costs will hit suppliers, retailers and consumers alike.
Salesforce expects three categories to experience significant growth this holiday season as consumers spend on their needs and do not need to purchase more clothing, luggage, sporting goods and clothing from. vacation. Kniffen agreed there would be winners and losers for category sales again this holiday season.
Kniffen said consumers are, by and large, done with COVID restrictions as they get vaccinated. He predicts that 2021 will be a record-breaking holiday season and that some retailers will see their gross margins improve due to shorter inventories and ongoing supply chain issues. He said retailers have likely under-ordered this year, which means shoppers had better buy it if they find what they want, because it likely won’t be cheaper.
Salesforce predicts that demand for travel and adventure products will increase this year as families return to planning trips, vacation reunions, and social events. Kniffen and Salesforce agree that consumers will spend more on clothing and bullion items like watches, designer sneakers or jewelry when they redeem Zoom events for in-person celebrations. Kniffen said consumers are in good financial health before fall.
Editor’s Note: The offer side section Talk Business & Politics focuses on businesses, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is operated by Talk Business & Politics and sponsored by Propak Logistics.