US retailers will pay $223 billion extra for goods

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According to salesforce forecasts released on Tuesday, in the second half of 2021, US retailers will spend more than 223 billion U.S. dollars in the same period in 2020.

This amount has increased by 62% compared to last year. It consists of an additional US$12 billion with suppliers, US$48 billion more in salary costs, and US$163 billion extra in logistics costs.

Salesforce VP and GM of Retail Rob Garf said consumers, in turn, should expect higher prices. “Retailers will certainly take on some of the burdens, and consumers are going to feel it as well, but given the significant increase across the board from the manufacturing sector to logistics to labor, it can’t be all passed on to the consumer,” he told CNBC.

What we have found through the first half of the year though, even with inflation and the increase in the cost of goods sold, partly being pushed off to the consumer, we are all a willing participant,” Garf added. “We’re willing to spend a little more. I think there’s enough momentum and positivity among people that they are willing to absorb the additional cost all the way through the holiday.”

In this study, Salesforce stated that it used its own and third-party data to track quarterly transactions in physical stores and online retailers for more than 1 billion shoppers worldwide.

The forecast came when the trucking rate reached a record high: 49% higher than in 2020 and 83% higher than before the pandemic. With the explosive growth of online shopping, the demand for e-commerce storage is also increasing.

Mastercard accounted that e-commerce in June increased by 8% year-on-year, a 95% increase from June 2019. CBRE estimates that for every $1 billion increase in retail sales, e-commerce storage space will increase by 1 million square feet

Retailers are trying to figure out at what point does this inflation become an issue or demand destructive?” Oppenheimer retail analyst Brian Nagel said in an interview. “No one knows the answer to that. It’s a moving risk.”

Salesforce also predicts that US retailers will face a labor shortage of approximately 350,000 workers during November and holiday shopping. Garf said that this would be the main catalyst, and wages will rise from the median of $13.02 during the peak holiday shopping period in 2020 to $19 this holiday season, an increase of 46%.

Source: CNBC

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