Many retailers saw their business take a hit in the course of the coronavirus pandemic. Now, they're hoping that the upcoming holiday shopping boom will help them make up for lost revenue and recover from the events of the past year and a half.
It's something real estate investors are banking on, too. Many retail locations have shuttered in the course of the pandemic, and the last thing malls and shopping centers can afford right now is a series of additional closures. Customers were already shifting away from malls before the pandemic began, and while some have since returned, that trend could reverse if the COVID-19 outbreak worsens.
But if retailers can't get their hands on the inventory they need to sell for the holiday season, they may be in for a very sluggish end to 2021. And unfortunately, many retailers could land in that situation due to unfortunate circumstances outside their control.
Supply chain issues abound
Flooding issues across Europe and China have already resulted in massive delays in shipping goods overseas. Meanwhile, COVID-19 shutdowns have forced many overseas factories to halt production, causing further holdups on the distribution front.
This week, two of China's busiest ports were forced to suspend operations with a destructive typhoon bearing down. And that added disruption couldn't have come at a worse time.
Between the events that transpired earlier this summer and this latest hiccup, it's looking more and more likely that supply chain issues won't manage to resolve themself in time for the 2021 holiday season. The result? Retailers may not have enough goods to sell, and they also may be forced to pay a premium to have them shipped from abroad.
Of course, retailers can always try to pass those extra costs on to consumers. But some shoppers may not be willing to bite. Ever since the pandemic began, discount stores and off-price retailers have enjoyed a surge in business as customers have grown increasingly budget-conscious. Now, some shoppers may be less than willing to pay a premium for holiday purchases when they can instead look to stock up on the cheap.
Of course, it's not just physical retailers that could get hurt by supply chain issues. Even online giants like Amazon could be impacted during the holiday season. But whereas digital sales have soared over the past year, in-store sales have, for many retailers, been sluggish. And those retailers can't afford to grapple with inventory issues at such a precarious time.
The Millionacres bottom line
Right now, the delta variant is causing a surge in COVID-19 cases, and if the situation worsens, consumers may opt to largely stay out of stores when doing their holiday shopping, just as they did at the tail end of 2020. If retailers can't sway customers into stores with sales and enticing offers, they're likely to lose a lot of business they can't afford to give up. And that's something that should have investors in shopping centers and mall REITs (real estate investment trusts) pretty worried.