Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

Covid, Hurricane Ida Could Dampen Fall Sales: Week Ahead

The Labor Day weekend in the U.S. usually means a slew of holiday sales to clear out summer items as retailers get set for the fall season. Not so much this year. Fall 2021 is facing a perfect storm of Covid-19 spikes and the aftermath of Hurricane Ida.

It’s too soon to gauge the impact on the consumer psyche, but the early signs aren’t promising.

The Department of Labor on Friday said job growth is slowing after two months of robust hiring. The retail sector lost the most jobs, although apparel and textiles manufacturers shed some positions, as well. And anyone looking to work in retail might need to shift gears from sales to fulfillment services. Walmart is adding 20,000 workers across its supply chain.

A more concerning harbinger was seen from the two indicators of consumer confidence—one from The Conference Board and the other from the University of Michigan’s Surveys of Consumers—which suggested that consumers might be becoming less willing to open their purse strings.

Of course, what might be causing consumers the most apprehension could be the spike in the more transmissible Covid variant, Delta. The daily death toll in the U.S. had fallen to the low 200s in early July, but has since climbed to 1,500, according to a story in The Washington Post. On a CNBC “Squawk Box” interview Friday, Dr. Scott Gottlieb predicted that a “true delta wave is going to start to build after Labor Day here in the Northeast and the northern part of the country.” Gottlieb, a physician, served as the 23rd Commissioner of the Food and Drug Administration from 2017 until April 2019.

While Hurricane Ida devastated coastal Louisiana, the storm also caused historic flooding, power outages and other damage across the Northeast. Prolonged power outages could also have repercussions for the oil and natural gas operations in Louisiana and Mississippi.

According to GasBuddy’s Petroleum analyst Patrick DeHaan, Labor Day weekend prices at the pump are expected to be the highest in seven years at $3.11 per gallon. While prices have slipped slightly in recent days, drivers can still expect to pay 90 cents per gallon more than they did on Labor Day 2020. And rising gas prices can often serve as a damper for consumer spending.

Still to be determined is the impact on daily necessities, such as food, as Covid cases spike and workers need to stay home during a time when labor availability is already a challenge for many employers. Big-box retailers such as Walmart and Target have been hard at work to bring in more goods to keep their shelves stocked, whether that’s chartering vessels or working with vendors to secure more goods.

But those efforts come at a cost through higher ocean or air freight charges. The second-quarter earnings season saw many retailers noting that they’ve adjusted their prices for select items, the so-called “surgical” evaluation that now has consumers seeing an inflationary spike in the cost of some goods.

 

More from our brands