By: Jo Miglino, Marketing Director at Quik Capital LLC
With all the turmoil over the last two years, this holiday season is essential for business owners to get back on track. Revenue generated during the holidays makes up a significant percentage of a merchant’s annual profits.
Consumers are being urged to shop early. A new consumer trends report from JungleScout surveyed 1,100 U.S. consumers and found that 31% of shoppers say they will begin buying for the holidays by the end of October, well before Small Business Saturday, Black Friday, and Cyber Monday. In addition, the report found that one in four consumers (24%) are planning on spending more this year than in 2020.
Holiday forecasts from three different firms confirm a sharp jump in year-over-year spending. According to Bain, sales in November and December are expected to grow by 7% compared with a year ago and reach $800 billion. Deloitte sees holiday retail sales climbing 7% to 9%. A forecast by Mastercard says holiday retail sales should rise 7.4% from 2020, fueled by a rebound in in-store shopping and persistent consumer demand.
While this should be good news for business owners, merchants continue to be challenged by the effects of the pandemic. Supply chain shortages and delays are disrupting businesses across all sectors of the economy. Higher prices and labor shortages have also added to the pain of SMBs.
Which U.S. small businesses are being hardest hit by supply chain disruptions?
The U.S. Census Bureau’s Small Business Pulse Survey (SBPS), designed to measure how COVID-19 is affecting small businesses, captures the extent of some of these business disruptions.
According to the U.S. Census Bureau, the percentage of businesses by sector that reported domestic supplier disruptions include Retail, 59.8%, and Accommodation and Food Services, 51.4%.
How Merchants Can Prepare for the Holiday Rush
Half of the merchants surveyed in a new report by Ware2Go, the UPS founded on-demand fulfillment network, 46.4% of merchants surveyed said that running out of inventory is their top fulfillment concern for 2021’s holiday shopping season.
In anticipation of heavy demand, merchants are stocking up – 63.2% report that they ordered their holiday inventory by August, 44.4% ordered “more inventory than usual,” and 43.3% reported ordering merchandise “earlier than usual.”
Small Business, the Chip Shortage, and POS availability
Merchants in need of POS systems and upgrades will find supplies limited by the global chip shortage. In July, new POS implementations were down by 10% because of the chip shortage. One manufacturer described the situation as 18 months of pain that will get worse before it gets better.
“Small businesses intersect with chips in two ways. The first is through their point-of-sale (POS) terminals,” notes Scott Talbott, senior vice president of government affairs at the Electronic Transactions Association (ETA). “As a result of the pandemic, many small businesses accelerated the update of their POS terminals to accept mobile payments, so any chip shortage shouldn’t affect these businesses in the short term.”
However, Talbott says that if the chip shortage becomes a longer-term issue — and some industry observers are predicting it could continue for up to two years — that could delay the delivery of new POS terminals.
It won’t just be POS systems that will be affected. It means higher up-front prices for chip-dependent hardware like card terminals, handheld units for servers, kitchen printers, and display screens for restaurant and retail businesses. Also, kiosks, tablets, and digital tools, including QR scanners, digital menus, online ordering, and contactless or mobile payments, will cost more.
Stock Up Now
As news of the problems with the supply chain spreads, consumers are being urged to shop early this holiday season. How will this affect your merchants? Will you have the cash on hand to quickly increase holiday inventory? A merchant cash advance, such as the one Quikstone offers, can help. To learn more, contact us today!