Retailers can pay $223 billion additional for items in 2H
Shoppers carry bags of purchased goods in the King of Prussia Mall in King of Prussia, Pennsylvania, December 8, 2018.
Mark Makela | Reuters
US retailers will spend $ 223 billion more in the second half of 2021 than in the same period in 2020, according to a Salesforce forecast released on Tuesday.
The amount corresponds to an increase of 62% compared to the previous year. It consists of an additional $ 12 billion for suppliers, an additional $ 48 billion in labor costs and an additional $ 163 billion in logistics costs.
Salesforce VP and GM of Retail Rob Garf said consumers should again expect higher prices.
“Retailers will certainly take on some of the burden, and consumers will feel it too, but given the significant growth across the industry from manufacturing to logistics to labor, not everything can be passed on to the consumer,” he said CNBC.
“But what we noticed in the first half of the year, we are all willing participants, despite inflation and price increases, some of which are passed on to the consumer,” continues Garf. “We are ready to spend a little more. I think there is enough momentum and positivity among people that they are willing to pay the extra cost for the entire vacation.”
For the study, Salesforce said it tracked quarterly transactions from more than 1 billion shoppers worldwide at brick and mortar and online retailers using data from first-party and third-party suppliers.
The forecast comes because truck rates are at an all-time high – about 49% higher than 2020 and 83% higher than pre-pandemic times. The demand for e-commerce warehousing is also increasing as online shopping is booming.
Mastercard reported that ecommerce grew 8% year over year in June and 95% year over year June 2019. CBRE estimates that for every $ 1 billion in retail sales, an additional 1 million square feet of e-commerce warehouse space will be required.
“Retailers are trying to figure out at what point does this inflation become a problem or a destructive demand?” Oppenheimer retail analyst Brian Nagel said in an interview. “Nobody knows the answer to that. It is a moving risk.”
Salesforce also predicts that US retailers will experience a labor shortage of approximately 350,000 workers in November and the holiday season. Garf said this will be a major catalyst that will increase wages by as much as 46% from a median of $ 13.02 for the peak of Christmas shopping in 2020 to $ 19 this holiday season.
However, according to Garf, retailers will expect more from employees, including inventory management, fulfilling e-commerce deliveries, and fulfilling Click and Collect or BOPIS – buy online, pick up in store.
Salesforce research found that retailers who offered curb pickup, drive-through, and in-store pickup options increased their sales 54% year over year in the five days leading up to Christmas 2020, compared to 34% for retailers, who did not offer these options. Garf expects these trends to continue this year due to cost savings for retailers and convenience for consumers.
“Retailers save on fulfillment because they are outsourcing the last mile to the consumer in every way, and consumers are willing subscribers because we’ve all had the experience of wanting to buy a product and it isn’t available, or we get two . “Three, four weeks from the date shown when we received our confirmation email,” said Garf.
“There’s an immediacy, convenience, and security aspect that still matters even as parts of the world come back online and return to some semblance of normalcy.”