This Christmas shopping season is not a happy time for retailers. The winter goods are late. Temporary workers are hard to find. If these challenges are not enough, a new variant of COVID-19 may bring a new epidemic suppressor to the holidays.

Although retailers have benefited from consumer spending in recent months, the possibility of unabated inflation and declining American savings rates still exists, and demand will soon slow down. Supply chain delays may also weaken the pricing power that stores enjoy. Any inventory that is still on the shelves later in the shopping season will need to be reduced in price.

At the same time, recruitment remains a challenge according to the National Retail Federation, which said retailers plan to add nearly 650,000 people during the holiday period. The long lines and messy shelves recently seen in shops such as Gap, Bath & Body Works, and Old Navy in busy shopping centers in northern New Jersey are a sign of unmet demand. Retailers stated that their staffing issues are the main reason they oppose mandatory vaccination. But Omicron is ready to cause new troubles for itself. After the Thanksgiving party, COVID-19 infections have multiplied, and many shoppers still do not wear masks at close range.

NRF is one of the trade groups suing to stop the Biden government's vaccination or testing requirements for companies with 100 or more employees. The continuing threat of COVID makes this position frustrating. Companies—especially crowded shopping venues—can and should strive to ensure the safety of workers and customers. But retailers worry that many of those who refuse the injection may be their customers or potential employees.

This fear is wrong. An analysis by Goldman Sachs Group Inc. found that concerns about health risks are part of the reason for the weak recovery in the labor force participation rate. Although it may cause a small number of workers to resign at the beginning, they will increase the employment rate in the long run. Where vaccines are needed, no large-scale evacuations have occurred. The licensing of Tyson Foods Inc. and United Airlines Holdings Inc. has been very successful. Even some NRF member companies, including Wal-Mart, have imposed vaccine requirements on office workers—not on the frontline employees of stores.

In turn, the shortage of workers will lead to congestion in the supply chain. Now, delayed shipments may leave stores with too much wool, flannel and other winter goods, which will lose their appeal once the holidays are over. The week before Black Friday, Victoria's Secret Company stated that a quarter of its pajamas inventory had been postponed.

Large chains try to prevent some end-of-season backlogs by changing orders with manufacturers at the last minute. But smaller retailers cannot do this so easily. Jack Kleinhenz, NRF's chief economist in northeastern Ohio, said: "They may not have enough space to store their inventory for the next season."

In the last earnings season, US companies generally managed to overcome inflationary pressures by raising prices, which pleased shareholders who have been prepared for poor performance. But any deep discounts that retailers are forced to take in the coming weeks could eat into profits and give investors an unpleasant first-quarter surprise.

Omicron makes everything more unpredictable. According to Kleinhenz, the outlook for 2022 looks "solid". However, he said, "This new variant of the virus is as serious as any virus we have seen, but we do not yet have enough data to understand how it will affect consumers and families." Higher vaccination rates in the United States will certainly Weaken any effect

At the same time, as retailers struggle with delayed shipments, patient shoppers have a potential silver lining: In a few weeks, winter boots and sweaters may be much cheaper.

We no longer post comments on our website, but we still hope to hear from you. Readers are invited to submit a letter to the editor or contact us on social media (we are on Facebook, Twitter, LinkedIn and Instagram). 

Sign up for free email news alerts and send important business news directly to your inbox. Click below to see everything we offer.

Don't miss the first chance to get the biggest news! Stay in touch with print and online business news in Northeast Ohio

For 40 years, Crain's Cleveland Business has been a trusted source of business news and information for executives and business owners in Northeast Ohio.

700 W. St. Clair Suite 310 Cleveland, OH 44113 216-522-1383