Will this holiday season be hard to buy or too expensive? Three experts from the Collat School of Business offer tips and tricks for navigating holiday shopping.
Written by: Savannah Koplon
Media contact: Alicia Rohan
When the leaves change, the air cools and the calendar turns to November, the ads and targeted messages about buying holiday gifts begin to flood. At a time of year marked by checking prices, allocating spending to things and people we love, and tracking gifts as they arrive one by one, many are worried about what this holiday season shopping means with potential product shipping delays and rising inflation-adjusted prices. hold on.
Experts from the University of Alabama at Birmingham Collat School of Business delve into the hot topics and questions surrounding pricing, shipping and budgeting for holiday shopping this season.
Will inflation affect commodity prices?
The impact that rising costs can have on holiday shopping is especially important for many this year. According to Ben Meadows, Ph.D., assistant professor of economics, it’s likely that many will experience sticker shock over holiday gifts, but it also depends on what they’re buying.
“For example, consumer electronics have actually decreased over the past year, while clothing has increased in price year-on-year by 5 percent, which is more than normal – although this is nothing compared to the large swings we’ve seen in food prices,” Meadows explained.
Because of the increase in food costs, Meadows explains that, Black Friday aside, the higher prices the average American may see on their credit card will likely have more to do with cooking a big Thanksgiving meal than buying gifts.
Meadows notes that year after year, inflation – the change in consumer prices – for each set of goods has continued to rise, meaning the prices we see now are the new normal for the future.
“Typically, we think of inflation as ‘cooling down’ rather than ‘falling,’ as we look at price stability,” Meadows said.
Will there be supply chain issues this holiday season?
After the first few years of the COVID-19 pandemic, many consumers in the United States and around the world are accustomed to shipping delays and supply chain problems. Are more clogs expected this shopping season?
“Companies seem to be refocusing their energy on their supply chains from higher costs to making sure their supply chains are efficient and agile. That is, they have worked hard to make their supply chain flexible enough to respond to rapid demand changes where they can quickly find other suppliers,” explains Thomas DeCarlo, Ph.D., Ben S. Weil Endowed Chair of Industrial Distribution. “For example, some large retailers have resorted to using more expensive air freight or even chartering entire cargo ships. They have been stocking their warehouses or renting space to ensure there is enough product available to meet holiday demand.”
“Don’t wait until the last minute to go shopping. In fact, it would be a good idea to have the bulk of the purchases done before December, if possible,” urged DeCarlo.
However, as DeCarlo explains, these changes and the fact that shipping costs have increased significantly have forced many manufacturers to make difficult decisions about what to ship, which will result in fewer consumer choices on the shelves.
“Recent inventory data shows that retailers have more than one month’s worth of inventory, so product availability – especially for large, space-consuming products – could be a factor in this shopping season, similar to the height of the pandemic,” noted DeCarlo. “Overall, most of the inventory data what I’ve seen suggests that retailers may have a hard time keeping shelves stocked with a variety of ‘standard’ products as we approach Christmas.”
So, what does this mean? Don’t wait until the last minute. In fact, it would be a good idea to get the bulk of your shopping done before December, if possible, DeCarlo urges.
How can I save money when buying holiday gifts?
Top of most people’s minds is how to save money when spending money to buy holiday gifts for the many people in their lives.
“It’s as helpful to create a special holiday budget as we would a monthly budget,” emphasizes Stephanie Yates, Ph.D., Regional Professor of Banking and chair of the Department of Finance and Finance. “Budgets are more important when prices are high.”
According to Yates, it’s important to decide how much you want to spend on decorating, entertaining, gift giving — whatever you think you can spend money on this season. He adds that it is important to make a list of all the people you wish to buy gifts for and set a budget for each person or category.
If money is tight this season, Yates suggests considering experiences versus physical gifts and/or considering another celebration — like volunteering — as a way to celebrate the holiday season.
“In general, I think sometimes we put too much pressure on ourselves during the holidays,” Yates said. “When preparing, it can be helpful to think about what is most important to you and your loved ones and focus on those things.”