The inequities of the supply chain crisis: the impact of the ‘disruption premium’ on consumers

The retail supply chain is in turmoil. Shipping costs are sky-high, key materials and components are in short supply or completely unavailable and it’s harder than ever to find staff. And that’s just the tip of iceberg. The disruption looks increasingly likely to last through the holiday season and well into 2022. While consumer anxieties remain focused on financial and health concerns, many will be increasingly worried about whether they can get their hands on what they want to buy and at what price…

Consumers have become accustomed to price increases, delays to orders, stock-outs of product and there are countless examples of retailers struggling due to lack of product availability. The near future doesn’t look much better.

Ongoing production delays due to factory closures, shipping uncertainty from overseas, rising e-commerce demand, increased delivery costs, labour shortages (in warehousing, transportation, and stores), and inflation show no sign of abating. And, despite their best efforts, retailers are going to have little choice but to pass this onto the consumer. As ever, those customers prepared to pay more may well experience less inconvenience, which has worrying social implications, particular regarding inequity and the impact on those without the means to pay a ‘disruption premium’. As such, a Holiday Shopping Survey found that respondents in higher income brackets are willing to pay more for additional shipping costs.

While it seems the commercial holiday season starts sooner and sooner each year, this may well be the time for to get holiday shopping in shape sooner rather than later. Major retail events such as Single’s Day and Black Friday could prove to be bonanzas as consumers race to secure happy holidays.