By Alan Wolf, YSN
Better hold onto your hats — and your wallets.
According to a forecast by Salesforce, U.S. retailers will be socked with a 62 percent increase in costs during the second half of 2021.
That amounts to an additional $223 billion by year’s end, comprised of an extra $12 billion for suppliers, an added $48 billion in wage expenses, and an extra $163 billion in logistics costs, CNBC reported.
Salesforce, which develops customer relationship management (CRM) software, expects some but not all of the cost increases to be passed along to consumers. “Retailers will certainly take on some of the burden and consumers are going to feel it as well,” VP/Retail GM Rob Garf told CNBC. “But given the significant increase across the board from manufacturing to logistics to labor, it can’t be all passed on to the consumer.”
Retailers are also being squeezed by the current labor shortage, with the shortfall expected to total about 350,000 workers as we head into November and the holiday shopping season, Salesforce said. Garf told CNBC that hiring challenges will contribute to wage hikes of as much as 46 percent this fall, from a median of $13 an hour during last year’s holiday shopping peak to $19 this holiday season.
But along with the extra pay will come additional duties, he predicted, such as inventory management and fulfillment of online orders.
To that latter point, Salesforce found that retailers who offered curbside, drive-through and in-store pickup options enjoyed a 54 percent spike in sales during the five days before Christmas 2020, compared with a 34 percent increase for stores that didn’t offer those services.
“There’s an immediacy, convenience and safety aspect that still plays in,” Garf added, “even as parts of the world are getting back online and getting back to some semblance of normal.”
Hat tip to CNBC.