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Forget Black Friday. Shop Now or Forever Hold Your Peace.

Supply Chain Frustrations Accelerating Holiday Sales

By Etosha Thurman, Chief Marketing and Solutions Officer, Intelligent Spend and Business Network, SAP

Holiday shopping is in full swing – at least for the consumers paying attention to supply chain trends.

Those of us in the supply chain industry understand that disruptions have persisted since March 2020. This has created a mainstream perception of supply chains as increasingly volatile, expensive and unreliable – but disruption has been more of an intermittent and confusing frustration for most in 2021, instead of the panic-buying and supply-hoarding catalyst it was in 2020.

Going into the holiday season, some industry insiders are fearful that these disruptions will hit hard again. Supply chain disruptions are forcing companies to think twice about the timing of their holiday sales, and many retailers are warning consumers to get their holiday shopping done early this year to avoid shortages and shipping delays. In fact, many retailers such as Amazon and Target announced their holiday deals much earlier than usual this year, having started in early October rather than late November. Leaving the majority of holiday shopping to Black Friday weekend could lead to many consumers being sorely disappointed with bare shelves, empty online shopping carts and delayed deliveries.

With persistent challenges in procurement and the supply chain, SAP surveyed 1,000 American adults to help better understand how they view the latest supply disruptions and their sentiment around the industry overall. Some interesting findings surfaced:

  • Frustration is growing as holiday supply chain challenges loom. Almost half of consumers (49%) experienced longer ship times during the COVID-19 pandemic, and 42% expressed frustration with how companies are managing their supply chains. The majority of consumers (83%) also reported experiencing out-of-stock items during the pandemic. Patience is wearing thin, as nearly two-thirds (65%) think companies should have found solutions to supply chain challenges by now.
  • Baby Boomers have high expectations for gift availability and delivery while Millennials and Gen Zers are more skeptical. Eighty-one percent of Baby Boomers expect holiday gifts to be available and in stock – compared to 75% of Millennials and 60% from Gen Z. Furthermore, 78% of Boomers expect gifts to arrive on time, while 63% of Millennials and just over half of Gen Z respondents (54%) said the same. Overall, one-third of consumers are planning for the worst, expecting that gifts will NOT arrive in time for the holidays this year. Having the visibility in place to inform consumers of product availability and delivery timeline is crucial to avoiding disappointment this holiday season.
  • Most consumers are forgiving of supply chain mishaps, but not right away. One in 10 consumers say that if a gift they purchase does not arrive on time for the holidays, they would never shop at that retailer again. Another 47% noted that they wouldn’t shop with that retail company again immediately, but that they may in the future. No matter how or why it happens, supply chain disruptions hurt brand loyalty among customers.
  • Delivering gifts on time isn’t the only factor brands need to consider. Sustainability continues to play a bigger role in consumers’ buying decisions – even when it comes to holiday gifts. This is particularly true among younger consumers, as half of Millennials said sustainability influences their gift purchasing decisions. Overall, 39% said they purchase from brands that tout sustainability, while 30% prioritize sustainable practices when making purchases, such as selecting slower shipping to combine packages and reduce waste. Brands can promote sustainability through their own procurement practices by ensuring the products and materials sourced are done so in a sustainable manner – from limiting carbon footprint to sourcing recycled/recyclable materials.

After last year’s chaotic holiday season that had more consumers buying online than ever before, proactive businesses and consumers are adapting their approach this season – especially with ongoing disruption anticipated this year.

For consumers, as of early October, almost a third (29%) had already changed at least one gift purchase based on supply chain shortages, and only 24% of total respondents expressed that they do not plan to shift their buying behaviors this holiday season. Almost half (45%) are buying earlier, and 44% are buying more online. Millennials are changing their plans the most, with 55% buying earlier than in previous years.

For businesses, agility and visibility are the name of the game. We’ve all experienced so much disruption from all angles recently, and there’s no going back to “normal” as consumers – and businesses – continue to change buying behaviors. Businesses need to broaden visibility not only across their own operations but across those of their trading partners as well, with the dual objectives of reducing risk and instilling resilience. To achieve this level of transparency, businesses are turning to digital business networks to capture the widest possible view into the interconnected operations of their trading partners from buyers and suppliers to partners in logistics, finance and contingent labor. Meanwhile, these digital networks – previously discrete according to function – are beginning to converge through cloud-based applications, unlocking exponential value in the process.

Consumers and businesses alike have been burned by supply chain issues and shortages during the pandemic, but with the right approach to this holiday season, we can still make it a merry one.

 

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