5 key decisions retailers are making right now

2022.08.08

This week, home and gift retailers are in Atlanta at the second major stop on the summer trade show cavalcade, completing their buying for the holiday season and into 2023. As we (hopefully) emerge from the pandemic conditions of the past two and a half years, companies are faced with big buying decisions in light of uncertainty about order fulfillment forecasts. Those who get it right in Atlanta (as well as Dallas last month and at upcoming summer shows in Las Vegas and New York) will set themselves up for successful Christmas shopping seasons. Those who don’t—well, it might not be pretty.

Here are five important decisions retailers—and, in many cases, the suppliers who sell to them—will need to make while setting their summer shopping agendas.

1. HOW MUCH TO BUY?

Predicting the spending patterns of consumers next week, much less in five months, is particularly difficult this year. While good employment numbers, ongoing wage increases and positive consumer sentiment bode well, inflationary pressures and rising costs of living continue to weigh heavily on shoppers’ minds. Coupled with overcrowded back rooms, retailers will need to balance their buying. Look for moderate ordering levels as a result.

2. JUST IN TIME, NOT JUST IN CASE

For the past 18 months, retailers have over-ordered, knowing that at least some portion of those goods would never arrive. That’s helped create a surplus of inventory and out-of-season stock. Smart retailers will be dialing back that pattern and returning to more normal ordering patterns, looking to receive goods more in sync with consumer buying habits.

3. WHERE ARE THE GOODS COMING FROM?We all know that China, and to a lesser extent other Asian nations, represents the overwhelming share of production in gift and home products. But with rising political, medical and ethical concerns, watch for retailers to start looking for products sourced much closer to home. That could mean domestic producers, although they are limited. More likely, products from Mexico, the Caribbean and other North American sources will be getting more attention as faster, more reliable producers. This will involve paying a premium, but it’s much less than in the past given high transoceanic shipping rates.

4. LOOK FOR LUXE

Even as the entire home market has slowed down, the better end of the spectrum has held up quite nicely … as it usually does. So, premium higher-priced merchandise should be on retailers’ shopping lists for their holiday assortments. Those price points will vary for each business, but clearly when consumers don’t have to ask the price, it’s a nice sale to make.

5. WHAT HAPPENS IF WE’RE NOT POST-PANDEMIC?

With the new COVID variant spreading quickly, and big unknowns like monkeypox hiding in the shadows, maybe we’re not yet done with pandemic shopping conditions. If consumers get spooked once again about shopping in person, retailers have to be prepared to pivot. That means e-commerce, of course, but also curbside pickups, home deliveries through services like Shipt and Uber and the ubiquitous BOPIS (buy online, pick up in store). It may not upend what people buy this summer, but it might slightly skew the mix toward smaller, easier-to-ship goods.

Many of these decisions would be in the normal course of business for retailers and suppliers alike. But the continued uncertainty of what’s next adds another level of complexity to the buying process at this summer’s shows. At least there will be more free mimosas and tote bag giveaways as market events start to return to something resembling normal—or at least, less abnormal.