Some Context: Why We’re Facing a Tricky Holiday Shopping Season
Global Microchip Shortage — There’s a good chance you’ve been impacted in some way, whether big or small, by the global microchip shortage. As a personal anecdote, a car dealership I recently visited admitted that they can only carry about 5–10% of the inventory that they carried just two years ago due to the lack of chip availability. So, what’s causing this microchip shortage? To start, the edge and IoT device explosion. With more than 127 new devices connecting every second, there are now more devices than humans on earth. What do all of the now 10 billion+ devices have in common? They all contain a microchip of some sort, and as a result, many of the 2021 top gifts will be impacted.
Supply Chain Disruptions — Extending beyond the aforementioned microchips, a laundry list of everyday consumer products is having difficulty staying in stock or replenishing empty stock. It largely started with disruption from the pandemic, where the global supply chain largely shut down, and today is paying the price as it struggles to catch back up. Consumers gave up their travel, entertainment and experience purchases and instead used spending money on goods for their homes. Many overseas factories were forced to close last year and couldn’t keep up with consumer demand for these items. Once manufacturing plants re-opened, they were forced to wait on container ships that were busy shipping protective gear, masks and hospital gowns around the world. From there, it’s been about playing catch-up, and there’s good reason to suspect these shortages won’t alleviate until well into 2022.
Understaffed Retail Stores — Retailers are trying to stay optimistic ahead of the holiday season, but according to a UKG survey, three-quarters of US retailers believe that the current labor shortage will not allow companies to keep up with what shoppers expect. That same survey saw that 64% expect to see a year-over-year decline in employment, even though shopping demand is expected to rise 8–10% this season year-over-year. Much of this labor shortage is due to hesitations around working in the grueling retail market, wanting higher pay or risks of contracting COVID-19.
Rising Inflation Rates — Consumer prices have risen 6.2 percent from a year ago, the largest annual increase in more than three decades. Even more recently, overall prices rose 0.9 percent in October alone, with gas, energy, vehicles, medical care and groceries taking a brunt of the hit. This rise in the inflation rate all ties back to the supply chain disruptions, but the White House has assured that these price increases are “transitory” and will return to a more sustainable rate once backlogs have caught up. One way some groups are looking to help right the inflation ship while reducing waste is by simply not buying anything through the Buy Nothing Project.