A more expensive Black Friday with fewer discounts due to global product shortages



The ‘perfect storm’ unleashed by the current crisis in trade and shortages of raw materials will impact the evolution of the quarter with the highest consumption of the year. The Black Friday 2021 campaign -whose main day will take place on Friday, November 26- will be more expensive and will have fewer offers
due to the pressure derived from the increase in costs suffered by manufacturers and traders
. Also because this year there will be no excess products in the warehouses to be sold through sales. This idea is taken from the report «The acceleration of consumption and the crisis in the supply chain» by KPMG, where it is concluded that Spaniards will anticipate their Christmas purchases this year to avoid running out of desired items
given the possible shortage of products derived from the breakdown of the chain
of supplies.

In the current scenario and after the reactivation of demand after the pandemic stopped, global trade is now affected by the confluence of shortages of some products, delays in shipments and the increase in transport prices as a result of higher raw materials prices and energy prices.

As a direct effect of this sum of factors, the experts consulted predict that fewer sales will be offered this Black Friday. “We will see less discounts than other years in terms of both levels and quantity of discounted products. Yes, a strong investment will be made to communicate these moments of purchase and promotions “, explains Enrique Porta, partner responsible for Consumption and Distribution of KPMG in Spain. Added to this is a forthcoming transfer of the costs at the source of the final goods. “An entry of the year awaits us in which we will see this transfer of the increase in the price of transport and raw materials in goods,” adds Leandro Real, senior advisor at Turnaround, Transformation & Working Capital at KPMG in Spain.

Therefore, the end of the year, where a large part of purchases are concentrated, will be more expensive for the consumer. «We are used to seeing a multitude of products with very attractive sales, but we must bear in mind that it will be an atypical Christmas and we will not have the same variety of products or discounts that we are used to; in fact, prices may go up ”, predicts Cristian Castillo, professor of Economics and Business Studies at the UOC, an expert in logistics. “After a year, and with distribution prices skyrocketing, it is clear that companies cannot afford that cost. If we add the rise in the price of electricity or fuel, this ends up having an impact on the final product and on consumers, since the price of the products rises », adds Castillo.

“If brands plan to make exclusive offers in any of the channels, or do something extraordinary in season to improve the shopping experience, they should adjust their inventory to guarantee supply,” argues María Daniela Isea, Nielsen’s head of research.

Advance of purchases

Another consequence of the supply crisis will be the tendency to advance Christmas shopping to get around a possible shortage in electronics, video games, toys, or appliances. Although the aforementioned study by the consulting firm KPMG shows that large businesses rule out shortage problems, they do contemplate the possibility of specific stock breaks.

In fact, the supply crisis does not go unnoticed by the industry, as another survey by the consultancy indicates, 82% of executives in the ‘retail’ sector fear a possible shortage in their inventories. A concern that consumers also share: 54% are concerned about shortages and shortages of some products. “Faced with supply problems and inventory crises, technology products, which are generally the most in demand at this time, will be the most affected. These mostly come from foreign manufacturers and it is increasingly difficult for them to meet the full demand, ”warns Kike Aganzo, idealo.es communication manager.

The fear of running out of fashion gifts has anticipated global consumption, not just in Spain. “There are signs that consumers are anticipating their purchases,” conclude the KPMG experts. 61% of Americans started their Christmas shopping as early as October compared to 10% last year. The truth is that, faced with this complex situation, 45.8% of Spaniards say that they will acquire Christmas gifts during ‘Black Friday’, according to a study by Idealo. The price comparator also predicts that, due to the shortage of raw materials, this year’s prices will be less competitive than on other occasions. “An example of this can be found in cases such as that of the Chinese multinational Lenovo, which has already announced that it will not lower the cost of any of its devices,” explains Aganzo.

Despite the obstacles and added problems, an increase in consumption is expected compared to the same period of 2020. The KPMG experts predict that the savings impounded by the Spaniards, which is between 25,000 and 50,000 million euros according to the sources, represents latent consumption that could continue to be reactivated in the coming months. “The willingness to buy on a regular basis increases five points and the number of people who will buy less to save money decreases from 21% in 2020 to only 11% this year,” says Isea.

The head of Nielsen also calls on brands to plan their strategy well: “Knowing consumer behavior and the position with which they will face the Christmas shopping season and Black Friday will allow companies to plan based on it and minimize adversity of supplies and breakdowns of ‘stock’ that may arise ».

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