Mercado | Article | Black Friday: A Time of Trepidation

Black Friday: A time of trepidation

Article

Black Friday: A time of trepidation

Black Friday. Arriving on the Friday following Thanksgiving (and followed by its younger sibling, Cyber Monday), it’s the time of year that has become a true representation of American consumerism. We’ve all seen the mid-aisle brawls as grown adults play tug-of-war with a Samsung 45-inch TV, or the decimated remains of a mid-west Walmart left broken and empty after the human storm has passed.
For many, Black Friday is a time of excitement and anticipation. There is truly no time better to get a competitive deal as a consumer. In fact, the International Council of Shopping Centers (ICSC) has said that customer enthusiasm for Black Friday shopping is up 8% this year, and spending is expected to increase by 4% overall.

However, for retailers with a complex import supply chain, this is the apex of the holiday season, and represents an extremely stressful period of time where months of planning, manufacturing, and logistics come to head..

The past few years have been especially chaotic for those who work in the industry. The pandemic brought sweeping store closures with it, shifting consumer demand almost exclusively to online channels, and resulting in businesses having to switch to an e-commerce driven revenue model overnight.

We’ve reported in the past about how this change took many businesses by surprise. Whilst importers canceled orders from their suppliers as they preempted declining consumer purchasing, the exact opposite happened. Online Black Friday sales instead grew by a staggering 26.5% in 2020 compared to 2019.

The result, as we now know in hindsight, was a scramble to get production back online that caused a near meltdown across the entire global supply chain.

Pandemic chaos and holiday woes

In the spring / summer of 2020, the sudden expedited surge in consumer demand knocked an already fragile industry into disarray. Crowded factories were forced to close as Covid-19 cases amongst workers ground production to a halt. Those products that did manage to make their way to port were met with overcrowded docks, limited shipping container availability, and a reduced workforce — leading to further delays and limited stock making its way to desperate Western consumers.

The bottlenecks became the talk of the dinner table, with cable news and late night chat shows even lapping up the mayhem. According to a report by Freightwaves at the time, the average time it took for ocean freight to go from Asia to the US had increased by 45% over the period of the year.

It was also reported that ports in Los Angeles and Long Beach in California (which account for 40% of all shipping containers entering the United States) at one point had 73 separate container ships anchored and waiting to unload.

So as Black Friday rolled around later in the year, the industry was experiencing the highest rates of consumer purchasing at the same time as it was battling global production and logistics issues.

The end (could be) in sight

Thankfully, whilst the supply chain industry issues that plagued us from 2020-2021 aren’t completely gone, they have certainly become less of an issue than they once were.

In fact, Bloomberg Economics recently suggested that the industry is steadily moving towards the end of pandemic driven supply chain problems, suggesting that “supply strains, whilst still afflicting many consumers and businesses, are becoming more mundane than menacing like they were six months ago, especially in the US.”

Unfortunately, another problem is now brewing: inflation.

Higher prices everywhere from the grocery store to the gas pump are likely to affect consumer behavior drastically, with many people pulling back on spending as disposable income levels drop significantly compared to the mid-pandemic when government checks were floating a false economy.

This leaves importers in a precarious situation: ordering too much stock without accurate forecasting in the run-up to Black Friday and Cyber Monday could result in them being left with excess unsold products and a large annual inventory bill to boot.

Now, with life as we know it returning mostly to normal (and brick and mortar shops being back open), professionals are turning their attention to Black Friday 2022 as a representation of:

  1. How well the supply chain is doing overall.
  2. What consumer spending looks like in this post-pandemic, inflation-burdened age.
  3. How companies are going to respond to demand (or lack thereof) and how it will affect following year’s holiday season planning.

What are you expecting from this year’s Black Friday and Cyber Monday sales when it comes to the import supply chain? Send us your feedback to kayleighhansen@mercadolabs.com or visit mercadolabs.com to find out more.

Got the holiday blues?

Mercado was designed to change the way the world trades, transacts, and interacts. The purpose-built import order management system connects brands to the people who make and move their products. Driving greater transparency, increased efficiency, and improved time to market.

Find out how you can thrive during the holiday season with Mercado. Get in touch to find out how you can get started.
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