Woman holding shopping bags and coffee and looking at phone.

Why it matters:

  • Pandemic-spurred supply chain challenges will make it harder to get goods on stores shelves this holiday season.
  • Small and medium-sized retailers can prepare for merchandise shortages and shipping delays by having backup suppliers at the ready for key products.
  • As online buying is projected to outpace in-store sales this coming season, retailers should be set up to handle e-commerce orders as well as buy online, pick up in store transactions.

This year, holiday shopping is expected to start earlier than ever, be more competitive and cause major headaches for retailers, from Main Street mom-and-pop shops to giants like Walmart, Macy’s and Target.

National retailers and manufacturers have been warning for months that factory, supply chain and shipping delays triggered by the pandemic will make it harder to get goods on the shelves in time for holiday shopping and will drive up prices. Those problems are now starting to trickle down to small and medium-sized retailers as well.

In this type of environment, “smaller entities with smaller buying power are the ones that bear the brunt,” Pawan Joshi, executive vice president of supply chain software provider E2open, told CO—. While national chains are taking extreme measures, such as chartering their own container ships to make sure their inventory arrives in time for holiday shopping, small retailers don’t have that option, Joshi said.

But one advantage small-to-medium sized retailers have over the big guys, according to Joshi and other experts interviewed by CO—, is that they’re more nimble and can pivot easier than the massive chains. Here are some of the headwinds stores will be facing this fall, and how they can steer around them.

Consumers are likely to start their Christmas shopping before Halloween, which calls for earlier seasonal displays and events

Shoppers have three compelling reasons to shop early this year: First, they have encountered out-of-stocks and shipping delays during the pandemic, and don’t want to miss out on must-have holiday items; second, they are worried about new lockdowns if the virus surges; and third, the big chains will try to lure those early shoppers to their stores with earlier-than-usual promotions.

Waiting to shop until December “is going to be really risky this year,” not just because of shipping delays, but because retailers may not be able to restock sold-out inventory, Kristen McGrath, editor at retail deals website RetailMeNot, told CO—.

Small stores will have to rethink their traditional holiday timeline, and hold events and display holiday merchandise earlier to keep pace with the national chains and consumers.

Joshi recommends that small retailers increase their orders for holiday merchandise “in order to be prepared for a premature rush of holiday shoppers.”

[How 3 Brands Tapped Tech to Slay Order Management and Reduce Labor Costs in a Post-COVID World]

Small stores will have to rethink their traditional holiday timeline, and hold events and display holiday merchandise earlier to keep pace with the national chains and consumers.

Small retailers must have a plan B if their supply chain gets derailed, such as backup vendors

The pandemic-triggered shortages of last year demonstrated that having backup suppliers for key products is good insurance for small retailers, said Suzanne Larabie, vice president of consumer products and retail for consulting and technology services firm Capgemini. “You can shift and spread your orders around,” Larabie said. “It may mean a bit more cost, but it also can prevent some of the delays.”

Ideally, Larabie said, retailers saw the holiday warning signs early enough to plan far enough in advance for shortages and shipping delays. Early planning and having good communication channels with suppliers can be critical, she said.

The toy industry, one of the sectors most affected by the shipping container shortage, has come up with a novel solution to help retailers find inventory in time for the holiday season.

Trade publication The Toy Book worked with toy manufacturers to create a resource, The Get List, which identifies toy merchandise that is already in U.S. warehouses and available for immediate shipment.

“The goal is to showcase products that are in stock in U.S. warehouses that retailers can immediately order to receive within a week,” Maddie Michalik, editor-in-chief of The Toy Book, told CO—.

Michalik said she expects independent toy stores and small retailers will benefit the most from the list.

“The truth is that specialty stores do not have the same resources as mass retailers, such as being able to charter their own transportation with products to fill their shelves,” Michalik said.

[How Data Is Helping Brands Recover Millions Lost to Product Returns]

Consumers expect an omnichannel holiday shopping experience — so deliver one

When the pandemic shut stores last year, small retailers quickly learned how to do e-commerce and to offer services like curbside pickup and same-day delivery to keep their stores in business. Consumers liked the convenience of those services and expect them to continue permanently.

A survey of more than 100 retail executives in August by KPMG found more of them plan to offer buy online, pick up in store, and curbside pickup services than last holiday season.

Online sales are also expected to increase, with online growth outpacing in-store growth and accelerating faster than in 2020.

Smaller retailers that used the pandemic to create the infrastructure they needed for e-commerce will benefit from the online growth and will be able to offer more products online that they could in their physical stores, Larabie said.

Retailers should prep for post-holiday sourcing challenges with modern supply chain tech

“Ultimately, the problems we’ve seen in the supply chain this year have exposed fault lines across the entire system, and in order to prevent future supply chain problems, it’s crucial for business to adopt modern supply chain technology to increase agility across the supply chain and avoid future build-ups,” Joshi said.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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