The Global Supply Shortage and What It Means for Brands Heading Into the Holiday Season

by | Dec 1, 2021 | Uncategorized

The economy is still recovering from the fallout of COVID, resulting in shortages in labor, household products, and electronics, among other things. The timing couldn’t be worse as peak holiday shopping is upon us, and I wouldn’t expect the situation to get resolved anytime soon. While consumers may be understanding of the disruption, they won’t be patient for solutions, and the pressure will be on the brands as to how they address this challenge.

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There’s a popular saying in the National Football League (NFL): “The best ability is availability.” Teams can become riddled with injuries due to the sport’s physical nature, forcing them to start the next best available player. Success is dependent on a team’s ability to stay healthy as much as it is on preparation and execution. I think brands will behave similarly this holiday season. Their hot new products may be in short supply, or out of stock, and they’re going to have to be creative in how they meet the high demand.

Limited availability and increased shipping time push more consumers into stores to find the items they’re seeking, providing an excellent opportunity for brands that get overlooked in online shopping. Impulse buying will increase as consumers feel the pressure of product scarcity, testing brand loyalty. For the most part, similar product types will likely be short in supply, but if there’s an Xbox in stock somewhere when a shopper was looking to buy a PlayStation, they might opt to purchase what’s available. The availability could result in a lifetime customer instead of just a one-time purchase; there is no better time to steal customers from the competition. I think the brands people are usually loyal to will get the first opportunity to keep their customers. For example, when Starbucks is out of my favorite breakfast sandwich (which happens more often than it should), I don’t go elsewhere; I typically just order the next best sandwich. If there weren’t other options, I probably would go elsewhere, and if I like the alternative better, Starbucks would lose that transaction and potentially all future ones. I expect larger return and exchange numbers than we’ve seen in recent years, as people are forced to buy products in fear of coming up empty-handed.

I’m curious to see how consumer behavior changes with the added element of scarcity. I expect more emotional decisions to be made, such as increased impulse buying. I expect brands to be creative in how they promote customer loyalty. I expect an increase in gift card sales, adjustments to return and exchanges policies, rain checks, and limitations of discounts and purchase quantity. Only time will tell, but solutions made during this holiday season could become the precedent for years to come.

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