Deloitte Vice Chair and U.S. Retail & Distribution Leader Rod Sides explains how consumer excitement should still be present this holiday shopping season despite supply chain and inflation worries.

Video Transcript

ZACK GUZMAN: Welcome back. As much as we've been talking about supply chain issues and inflation fears this year, the US consumer is still planning to spend a bit more than they did last year this holiday shopping season. A big piece of that might be because they're back around family for the first time in a long time. But a new report from Deloitte digging into that says that spending could be up more than 10% over the holiday shopping season this time around versus what we saw last year in the pandemic.

And for more on that, I want to bring on Rod Sides. Deloitte vice chair in US retail distribution leader joins us now with a closer look at that report. And Rod, I mean, when we look at it, maybe not surprising to think that people would want to spend more last year, holiday seasons, of course, interrupted around the globe due to the pandemic. But what are you seeing in terms of where they plan to spend and I guess how things have changed in just a year's time?

ROD SIDES: Well, I think folks are looking forward to getting back together, number one. And so we're seeing spending go up pretty dramatically year-over-year. So what's really interesting is that overall, we're seeing spend up about 12%. We're seeing the middle income group at least for the next week really driving that up about 18%.

And to your question in terms of where, we continue to see mass merchants do really, really well. Online retail does really well. But we saw a couple of bright spots for club, the club position there, some of the dollar stores doing quite well as we go into the holiday season. So it looks like it's going to be a tide that's going to lift all the boats, and especially early in the season. That's the other thing we expect.

AKIKO FUJITA: Yeah, Rod, to that point, how much of that demand we typically see in the weeks leading up to Christmas have been pulled forward because of all those warnings we've heard about supply shortages and those products not being available come Christmas?

ROD SIDES: What we found is about 70% of the respondents to our study have already started. And so that's up from about 60% over the last couple of years. So again, many people are starting much earlier in the season. That means that certainly what we're going to see over the course of this next week is folks are going to catch up. Those who have started earlier are probably going to spend as much as 80% of their budget by the time we get to the end of the holiday weekend here. And generally, those who start earlier spend more, which bodes pretty well for retail as well.

ZACK GUZMAN: I mean, obviously, Black Friday, Cyber Monday, two events that a lot of people look forward-- some even circle it on their calendar. They really want to get all the good deals then on those days. We've been talking about maybe how desperate some of these retailers have been that they've already been having some price discounts across the board to get people back in stores. But, I mean, what are you expecting in terms of how true to their names those days are going to live up to on this year, in 2021, given, I guess, some of those concerns?

ROD SIDES: Well, I we've all wanted to pronounce Black Friday dead for quite some time, but it's back with a vengeance. So year-over-year, we're seeing Black Friday participation up about 2%. We're also seeing folks kind of spend all the way through the weekend. Cyber Monday actually down a little bit in terms of when people expect to shop, because many have moved their orders up online because they do fear stockouts when we've gone through that. So one of the views is that folks are really moving down that pathway.

When we go through this weekend, clothing, accessories number one in terms of the category, as well as for the season overall. Electronics up year-over-year quite dramatically. And then food and bev making a big comeback over the course of next week as folks are moving out pretty dramatically. So from that perspective, we're finding a lot of folks are back in the stores. They feel more comfortable going in stores, given safety protocols and where we are with vaccination status, et cetera.

So we think a lot of retailers are poised to do real well over the weekend. And again, I think the key is going to be to be in stock. We know that that's something that consumers are looking for. About 65% of respondents said they were going to check retailers' websites to see if they're in stock before they head to the store. So accuracy of inventory is going to be critical as we go into the season, and especially over the course of next week.

AKIKO FUJITA: And Rod, you mentioned that consumers are really eager to go out and spend again. But you could argue retailers are looking to make up a lot of the revenue they lost during the pandemic. To what extent have those discounts been moved earlier? I mean, what are we seeing on that front about how much they're looking to slash prices to really get consumers through the door or online, spending earlier?

ROD SIDES: Well, many of the offers had started earlier. There was even some notes today in terms of the Thanksgiving week specials that were out. But a lot of those specials were released a couple of weeks earlier than we normally see from that perspective. So it was really driving a lot of that overall activity.

When we ask folks who have shopped already, what are you seeing in pricing, what we found is about 54% said it was pretty consistent year-to-year. About 7% said they were expecting greater discounts and they were seeing that. And the remainder of them didn't see as high of discounting as they had in the past.

So I think what we're finding is those retailers who are trying to regain the lost ground, I think they're pretty aggressive in the first move in the market. And I think the real key is going to be can you create a substitution algorithm? So if your first choice isn't available, you can keep the consumer on the website or in the store to look for option two and three, kind of give them some of the supply challenges.

ZACK GUZMAN: Yeah, going to be tricky to meet all of that demand out there. Obviously, a lot of people looking to get out and do some shopping around the holiday season this time around. But very interesting to see all that in the report. Ron Sides, Deloitte vice chair and US retail and distribution leader, thanks again for the time.