Inflation might wind up being the thorn in retail’s side during the year’s busiest shopping season, according to experts at Sourcing Journal’s annual Fall Summit.
The 2022 holiday season may not be as lucrative as it has been in years past, Vera Bradley president Daren Hull said on Tuesday. The women’s accessories executive spoke about the “uncharted waters” that retail is currently navigating as it aims to appeal to increasingly cost-conscious consumers.
Retail could see “some deceleration” in topline holiday sales growth, with sales set to rise just 6 percent to 7 percent instead of the 9 percent to 10 percent usually seen during the season. Taking inflation into account, “Most of the people in this room are going to see flat to negative unit growth, and that’s something big to digest,” Hull said.
The Amazon and Outdoor Voices veteran said that brands should be more worried about the consumer’s overall mindset going into the next 12 to 18 months, however. “Everybody keeps arguing about what the definition of recession is, and I have been pretty open in saying that if it walks like a duck and quacks like a duck, it’s a duck,” he said.
“We will probably end up landing in a recession in the early part of next year, probably for two or three quarters, so when we get to this time next year, we are hopefully seeing sort of a ray of light through the system,” he added. “The most pessimistic people are saying we’re going to keep rocking on this edge of a recession until summer of next year, and then we could be looking at more like four or five quarters of challenges.”
Hull said that his greatest concerns for Vera Bradley surround its supply chain—namely, “logistics expenses, time and availability, legislation, increased material pricing, increased cost of transportation, tariffs… and Covid closures.” He believes many brands have lagged when it comes to adopting technology to manage their supply chains, though many quickly adopted consumer-facing digital solutions during the pandemic. Investing in new platforms and technology could help “solve some of the problems and eliminate some of the waste” resulting from current supply chain models, saving brands money and promoting efficiency in the process, he pointed out.
When it comes to managing supplier orders and inventory during uncertainty, Hull said that brands need to have multiple potential roadmaps to help them move forward. “I think we should be spending a lot of time not just making a base plan, but also making Plan B, Plan C, Plan D, Plan E and Plan F,” in order to address “whatever happens to be on our mailbox when we wake up in the morning,” he said.
And while bottom lines are top of mind for players throughout the sector, Hull recommended that brands think more collaboratively and engage on a deeper level with contemporaries as well as supply chain partners. “Looking holistically across the business supply chain, it’s often been about these point-to-point relationships… where everybody’s doing this dance of looking after their own self-interest,” he said. “I think this is a time where we need to have some awareness as to partnership—have some collaboration on a global scale.”
“It’s not just you investing in technologies—it’s encouraging your partners… to find ways that we can use tools that have evolved over the last decade to really conquer some of these problems,” Hull said.