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Could Supply Chain Issues Drive More In-Person Retail Sales This Holiday Season?

By Laura Agadoni – Nov 11, 2021 at 8:45AM

Key Points

  • Supply issues are frustrating for retailers and consumers alike, and may grow worse with the holiday season upon us.
  • Shopping online is a headache and going to brick-and-mortar stores might not be great, either.
  • This isn't the time for retailers to focus on generating revenue; rather, it's a time for strategizing how to survive.

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Consumers: Get used to it. The supply chain problem is because you're ordering too much stuff. At least that's the message we're getting. But is the answer to just stop buying so much?

Just when consumers have come to terms with, and have even embraced, online shopping during the pandemic and after, the proverbial rug's been pulled out from under us because of supply chain logjams -- and during the holiday season to boot. Investors in the retail space might want to know what to expect for the industry.

The problem

There's crippling congestion at our busiest ports, a shortage of workers at the docks, not enough storage space for goods when they finally arrive at a warehouse or distribution facility -- and then there's not enough truck drivers to deliver goods to their final destinations, not to mention that the prices to ship goods have skyrocketed. This is causing frustration for retailers and consumers alike, which is intensifying as the holiday season kicks off.

Just as the old saying about hiring contractors goes, "You can't get good, fast, and cheap; pick two," the three metrics retailers use is "affordability, variety, and spontaneity," business professor Tinglong Dai told TechRepublic, adding that retailers during this time need to sacrifice at least one of those two.

People sitting in a circle with whiteboard.

Image source: Getty Images.

Is in-store shopping the answer?

With online shoppers finding so many goods on back-order, will consumers start returning to physical stores? They might, but the in-person experience -- at least at some brick-and-mortar stores -- might not be great, either.

"This year, like last year, there will be the added hindrance of not being able to view and compare items in-store," Somdutta Singh, chief executive officer of Assiduus Global, a supply chain company, told TechRepublic. Alla Valente, senior analyst at Forrester, a global market research company, concurs, saying, "For consumers who are used to getting something off the shelf of a brick-and-mortar store, the new normal is having to wait for months for items."

So what's the answer: Is retail dead?

With consumers frustrated with both online and in-person shopping, business as usual needs to change for many retailers to stay viable. Valente sums up the situation retailers face: "It's about managing risks you can't control."

Singh offers some advice on how this can be done by saying, in a nutshell, that this isn't the time for retailers to focus on generating revenue; rather, it's a time for figuring out how to survive. One strategy would be a focus on omnichannel marketing (delivering a consistent shopping experience among all channels), while another would be to completely overhaul physical stores.

What overhauling physical stores might look like

Singh says a revamp of physical stores is a likely aftermath of the supply chain fiasco. Stores might be wise to specialize, selling only what they're known for and not carrying as much variety. They might instead focus on providing an entertaining and rewarding experience: think Ikea, Lush, and Lululemon, three retailers that make entering the store a fun, interactive experience for shoppers.

Pop-up shops, where stores come to people, might be more common as well, since those stores can offer the items that are in stock -- and not have to make consumers wait for the goods they came prepared to buy.

The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.

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