Americans could pay 20% more for holiday gifts this year, analysts say

Holiday shoppers could see challenging 2021 season

Retail experts say the best thing for holiday shoppers is to start buying early before items are out-of-stock.

SAN FRANCISCO - Salesforce, a global software company, predicts holiday shoppers could pay up to 20% more for their gifts this year compared to last year.

The company also predicts online sales will grow 7% following the 2020 holiday shopping season.

Company analysts point to multiple reasons why wallets and purses could take a hit this year — from the COVID-19 pandemic to the backup of cargo ships at America’s ports.

According to The Wall Street Journal, tens of thousands of containers are stuck at the ports of Los Angeles and Long Beach, California, the two West Coast gateways that move more than a quarter of all American imports. More than 60 ships are lined up to dock, with waiting times stretching to three weeks.

Participants in each link in the U.S. chain – shipping lines, port workers, truckers, warehouse operators, railways and retailers – blame others for the imbalances and disagree on whether 24/7 operations will help them catch up. All of them are struggling with a shortage of workers, according to the Journal.

The COVID-19 pandemic has also impacted manufactures.

The more transmissible delta variant shuttered the economy in Asia including Bangladesh, where many clothing factories temporarily closed over the summer. Bangladesh’s clothing factories are part of the world’s second-largest garment industry. Since the pandemic started in March 2020, the Bangladesh Garment Manufacturers and Exporters Association estimates the industry lost $3 billion in orders last year.

On top of the bottlenecks at the ports and the pandemic, Salesforce says companies continue to grapple with a labor shortage even as the U.S. economy rebounds from the 2020 global lockdown.

Restaurants and hotels have been "ground zero" for the labor shortage, but other sectors have been struggling to fill jobs, including non-union construction and home health care, said Michael Bernick, a former director of the California Employment Development Department.

If there’s any good news, Salesforce projects a 94% decrease in packages at risk of being delayed, or 40 million packages worldwide, down from 700 million last year — with just 5 million packages expected to be at risk of delay in the U.S. Company leaders attribute this to more Americans placing larger and fewer orders and 40% of U.S. retailers opening brick-and-mortar locations that offer online consumers a place to pick up their packages.

"While last holiday was defined by the last mile, this year is expected to be dominated by the first mile," Rob Garf, VP and GM of retail at Salesforce, said in a news release. "With persistent global supply chain disruptions, retailers must draw consumers to their online and physical stores early in the season to fulfill demand and capture holiday spending."

Salesforce also said marketing departments may have a tougher time tracking consumer behavior this year. The company claims getting user activity through third-party data is expected to become more expensive with global legislation and consumer preferences bending to increased internet privacy.

Through it all, retail experts say it's best for Americans to start their holiday shopping early.

"Getting ahead of the curve on holiday shopping is crucial this year. Many toymakers such as Mattel and tech manufacturers alike are struggling to navigate the supply chain and keep shelves stocked," said Brett Rose, the founder and CEO at United National Consumer Suppliers. "Unfortunately, this also means they are struggling to keep prices down. Once the prime shopping season comes around, it will be too late for most."

The Associated Press contributed to this story. This story was reported from Los Angeles.