Christmas shopping may show up early in consumption activity this year

Author: Justin Low | Category: News

Have you done your Christmas shopping this year?

If you haven't, then you better get on it.

With all that is going on, this is perhaps something to be wary about ahead of the year-end holidays - in that we might not get to see a surge in consumption or sales activity in late November or December for the Christmas period.

Why is this the case? Well, it all ties back to the pandemic recovery stage we are at right now, in which the world is experiencing a hit to supply chains.

For businesses, this is an extremely tough period and the issue here is that they may not get enough supplies for items that usually sell on Christmas for the holiday period.

In the worst-hit countries, parcel and warehouse deliveries have been stymied by lockdown and the spread of the virus, seeing a massive delay to postages. The increasing backlog only raises fears of further disruptions going into year-end.

And elsewhere, shortages of cargo ships and containers (evident by the rising shipping costs globally) only helps to exacerbate inventory issues for retailers/suppliers.

As such, many items that may be planned for delivery during the coming holiday season in December may not be available until 2022 at the earliest.

Understanding that pattern, there might be a chunk of consumers who will be incentivised to do their Christmas shopping early this year.

A possible scenario for retailers/businesses is whatever inventory that is left now is mopped up early well before the holiday season, then not seeing a meaningful or significant spending boost towards the year-end amid a lack of supply.

One negative effect of this whole ordeal is that as inventories wear thin, consumers who are "late" may have to be forced to deal with a surge in prices and that eventually leads to less appetite for such expensive spending.

It's only the end of September but best be wary that the ongoing effects brought about by supply bottlenecks and capacity constraints will reverberate for many more months, and will likely persist into next year by the looks of it.

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