For years, consumers have gotten used to planning our purchases. Or rather, to postpone them. What need would there be to purchase a product in October when in just a month and a half we would enjoy juicy discounts thanks to Black Friday or the Christmas campaign? This logic, encouraged by retailers and industry, could have its days numbered. At least for a season. And the fault, once again, is the logistical crisis.
Goodbye gifts. The Wall Street Journal tells it: the delicate situation of many sellers, inflation and the blockage of the supply chain will depress the offers during the next months. If during the last decade the norm had oscillated between 10% and 30%, reaching 50% on many occasions, this winter we will have to settle for 25% in the best of cases and 5% in the worst. There will be exceptions, but the reading is clear: we will not find so many bargains.
It already happened in 2020. The last Christmas campaign served as a warning. Most sellers reached the final stretch of the year out of breath and with low inventory, which prevented them from applying their traditional pricing strategy. Far from representing a point in time in the retail industry, shortages have become the norm: product volume on-line labeled “out of stock” has grown 172% compared to January 2020. And without wardrobe bottom, stores can no longer offer those juicy Christmas discounts.
Enter inflation. The era of hyperdiscounts is probably over. Most of those aggressive strategies drew on low interest rates and deflationary dynamics in the main consumer markets. Today the dynamics have changed: inflation in Spain has risen to 4% year-on-year and 3.1% since January; while real prices in the euro zone increased only 3.4% in September, the largest percentage since 2008. Everything is more expensive than ever, be it energy, coffee or … smartwatch that you long for so much.
Global crisis. We have seen on other occasions how the coronavirus triggered a logistical earthquake. When the economy reactivated many industries had been re-scaled, depriving the container market or of productive muscle. This has had two short-term consequences: everything takes longer to arrive, because there is no inventory; and everything is more expensive, because there is more demand than supply. Reading: If you want that Christmas present you’ve been tracking for months, buy now.
And don’t expect big discounts.
The impact. Is the Great Logistics Crisis that torments us the result of a very specific situation or the new normal that will change our way of consuming forever? The question has occupied analysis and opinions of all kinds. Here it is argued in favor of the latter. The coronavirus would only have accelerated the transformation of the logistics industry, one less oriented towards the oversized inventories that facilitated the era of deep discounts (and I-want-it-I-have) and more towards higher prices and local production.
That is, the retail I had been living a fiction for years where the real costs of producing and bringing the stock of China, in a big way, they were postponed to the future. The pandemic has only facilitated his return to reality. Tomorrow, like this, would happen to pay more for everything that we were buying at low prices. Or by buying less.
Image: Toby Melville / Reuters