Are retailers encouraging panic purchasing?

These days, it is hard to avoid supply chain issues. Every sector is either impacted, or on alert for potential disruptions.

As the holiday season approaches, there is more pressure on both suppliers and buyers to make sure they have what they need. To encourage shoppers to return to stores and avoid out-of-stock items or shipping delays, many retailers have already begun holiday sales.

Target kicked off Black Friday sales in October — roughly a month before the “official” shopping holiday. It is advertising “Holiday Best” deals to entice shoppers into buying now, before they miss out.

Other retailers aren’t so subtle. Lululemon’s CEO recommends that patrons shop early. The athleisure wear chain saw explosive sales throughout the pandemic and then faced stocking issues when factories in Vietnam were forced to close due to COVID-19.

As a result, customers are rushing to stock up, largely out of fear that if they don’t act now they’ll come up empty. So, are retailers actually recommending a form of panic purchasing gift wrapped as holiday cheer?

The retail industry is on track for a record-breaking holiday season. But, ensuring they have products to sell will cost them. Salesforce estimates that the cost of goods sold for US retailers will increase $223 billion over last year, largely driven by increasing prices in freight, manufacturing, and labor.

Outside of retail, there are also many grocery stores that are already experiencing empty shelves due, at least in part, to consumers hoarding food. The impending holiday pressure will exacerbate these issues.

There are two questions I can’t quite shake: As shoppers become motivated to overbuy to make sure their holiday tables and trees are full, will others be left without access to basic necessities? And what will come of the smaller stores and independent retailers that don’t have the buying power of national chains?

This time of year is a wonderful opportunity to reflect and be grateful for what we have. But I fear that this year will also be notable for what we, and others, do not.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.

Investor in and lover of fine wine and restaurants.