Business experts predict disruption, shortages, flexibility and inflation in store for 2022
KALAMAZOO, Mich.鈥擲upply chain worries are on the minds of many Americans as they prepare for the holidays, and businesses are being tested in every area from retail fulfillment to staffing and more. Check out what experts from Western 九一麻豆制片厂 University's Haworth College of Business are saying to expect as you hit the stores, fill your virtual shopping cart and look ahead to trends in the economy and hiring that will affect all businesses as we approach 2022.
supply chain
Tom Kelly, instructor of integrated supply management, points to a perfect storm of product shortages, logistical issues and a lack of key equipment, resulting in supply chain challenges for the holiday season and beyond.
"We are going into the holiday season with a very high possibility of product shortages in virtually every sector of consumer goods. Retailers continue to encourage shoppers to start shopping early before the shelves are bare. However, the lack of availability is only part of the story for the end of 2021 and the beginning of 2022. As is always the case with supply and demand, lower supply usually means higher prices in the marketplace, and we are already starting to see these types of increases manifest in prices at the gas pump and grocery stores," Kelly says.
"We should not expect the environment of higher prices and lower product availability to go away at the end of the year. The logistics of getting materials to where they are needed continues to be strained. We keep hearing about the shortage of truck drivers (to get product to its destination). However, in addition to a personnel shortage, the logistics industry is also looking at equipment shortages. As you might expect, those shortages are caused by equipment manufacturers not being able to get the raw materials they need to build their products. This becomes a vicious cycle," he continues.
"For 2022, businesses and their supply chains are going to need to take a very close look at their logistics and planning functions. They will have to rethink how they are going to increase accessibility to the material they need to keep customers happy and make the profits necessary to grow."
Digital marketing and e-Commerce
Dr. Scott Cowley, assistant professor of marketing, highlights what to expect in your shopping cart鈥攐nline or in-person鈥攁nd how companies and consumers are evolving as a result of the pandemic.
"There's a lot more uncertainty in this season's marketing. Consumer confidence is relatively high, but that won't matter if companies can't deliver due to supply chain issues. Companies are trying to spread out the shopping season and associated promotions as much as possible while preparing to be ultra-adaptable in case certain products become unavailable. Businesses may have to change plans, pause campaigns and have new campaigns ready to launch to avoid wasting marketing dollars," he says.
"As a consumer, you'll definitely want to adjust your expectations. Higher costs, lower inventories, slower shipping times, smaller selections (including holiday foods) and longer store waits, all tied to global supply chain and staffing problems, will affect this holiday season. If you want to maintain your normal shopping-related traditions and number of gifts purchased, you may need to start earlier," Cowley continues, emphasizing the need to be extra patient while shopping this season.
"The world is itching for a full reopening in the new year, but what that world looks like is a very emergent thing. The distribution of preferences for how people want to travel, eat, work, shop, be entertained and live will have evolved dramatically in the course of two years. We're spending a lot more of our time in digital channels than ever before, and I think businesses will finally get the hang of what makes a good digital experience,. So there's reason to be optimistic if you are a consumer whose shopping values now skew heavily toward convenience, personalization and safety."
Labor
Dr. Satish Deshpande, dean of the Haworth College of Business and professor of management, speaks to why you may encounter adjusted hours at many businesses, signs asking for patience with short-staffing and pressure to offer more pay and competitive benefits to employees you are hiring.
"Currently, there are millions of job vacancies in the U.S. forcing companies to raise pay to attract qualified applicants. The shortage of labor has been attributed to factors like aging and retiring workers, limits to immigration and demands for better pay and flexible working arrangements. People may still be hesitant to return to work until their families are fully vaccinated and their children are able to return to school and day care full time. While the COVID-19 pandemic has heightened the labor shortages, the roots to these problems are pre-pandemic," says Deshpande.
"Unfortunately, the lack of talent is also contributing to supply chain disruptions. It is expected that labor shortages will persist into 2022, forcing companies to raise salaries and prices, which in turn will create inflationary pressures on the U.S. economy," he continues.
economy and financial markets
Dr. Devrim Yaman, associate dean and professor of finance, discusses the highs and lows in terms of the economy and what we can expect in the new year.
"Consumer spending over the holidays will be influenced by experiences during the pandemic. For over a year and a half, U.S. consumers have faced empty shelves due to product shortages created by supply chain problems and a tight labor market. Consumers also had to switch to brands that could provide the products in reasonable time frames. As a result, this holiday season I expect shoppers to shop early and have much less brand loyalty. This will also be a strong holiday season as many consumers have additional disposable income from a decline in alternative spending opportunities due to restrictions on travel and entertainment," she says.
"The U.S. economy will continue to recover in 2022 with increased vaccination rates, a $1.2 trillion infrastructure investment that resulted from a recent bill and increased consumer spending. The inflation rate over the previous year reached 6.2% last October, and I expect high inflation and hence higher prices to prevail in 2022. With a strengthening economy and high corporate earnings, I expect the financial markets to remain strong over the next year," Yaman continues.
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