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10/28/2021

Study: 98% of retailers having supply chain issues; will last beyond 2022

Marianne Wilson
Editor-in-Chief
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Retail executives are not counting on supply chain woes to ease anytime soon.

Fully 100% of surveyed senior retail executives agreed that supply chain disruptions will affect sales, prices and promotions during the upcoming holiday season, according to a study by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania. And 98% agree that supply chain issues will continue impacting the retail sector through 2022 and beyond.

According to the study, the top three ways retailers are combatting supply chain issues is by improving their forecasting, finding new manufacturing or vendor partners and streamlining assortments.  The increased costs of goods and shipping are being handled by retailers in various ways, with some trying to mitigate the supply chain costs as they head into the holidays.

“Over a third of retailers are absorbing the hit and keeping prices consistent,” said Professor Thomas Robertson, academic director of Wharton’s Baker Retailing Center.“However, an “astounding 59% of retailers said they will be passing on the cost to consumers. For this holiday season, we anticipate that consumers are going to bear the brunt of this disruption through increased shipping and product prices.”

Consumers can expect fewer sales and promotions this holiday season, with 22% of surveyed retailers saying that they will eliminate or reduce planned promotions in response to lower inventories and higher prices. Also, nearly two-thirds of retailers anticipate a margin hit of less than 10%.

“Consumers have been conditioned to expect wide availability and lower prices starting with Black Friday and extending through to post-holiday sales,” said Greg Petro, CEO of First Insight. “Our research indicates that this year will be decidedly different, and consumers should plan to shop early to avoid disappointment and expect to pay more. Smart retailers and brands are safeguarding margins by optimizing their pricing and promotions based on real-time voice-of-customer-data.”

Despite ongoing supply chain disruptions and creeping inflation, the outlook for holiday spending remains strong according to numerous holiday surveys. The National Retail Federation on Wednesday forecast that holiday sales during November and December will rise between 8.5% and 10.5% over 2020, totaling between $843.4 billion and $859 billion.

First Insight's findings are based on a survey conducted in partnership with the Baker Retailing Center at The Wharton School of the University of Pennsylvania. The executive survey was based on a sample of 51 retail senior-level business executives (C-suite, executive VP/senior VP and director roles), from Wharton’s Baker Retailing Center boards and network and was fielded in October 2021.