Tag: supply and demand

What to Expect for Holiday Shopping 2021

by Advantage One, posted in Announcements, Budgeting, Convenience, Lifestyle, News & Events, Tips & Best Practices, Uncategorized

The holidays are coming and it’s time to hit the shops! Retailers and consumers around the nation are anticipating a holiday season that’s a lot closer to pre-pandemic days than last year’s festivities. Unfortunately, though, suppliers are cautioning consumers to expect supply shortages, shipping delays and higher price tags than ever.

With that in mind, here’s a look at what you might expect to see this holiday shopping season.

Supply shortages

You may have already noticed the dearth in available products, from household goods to the season’s hottest toys, when shopping for the holidays and everyday goods. Suppliers are struggling to stay ahead of shoppers’ demands while still catching up on the manufacturing lag they experienced during the lockdown. Suppliers are also dealing with a labor shortage, which makes it challenging to meet their own manufacturing quotas. Finally, many manufacturers rely on other suppliers for the materials they need for fulfilling their product demands — shipping delays (described in more detail in a moment) and worldwide supply chain bottlenecks are slowing down their production processes even further.

Shipping delays

Even when manufacturers manage to keep the supply of their products ahead of the demand, there can be significant delays when the goods land in the U.S. To illustrate, in mid-September, a record 70 cargo ships were waiting to dock in the LA and Long Beach ports, two ports which handle approximately 40% of the country’s imported goods. The logjam is a direct result of a scarcity in available storage containers, as well as uneven deliveries of shipped goods as suppliers race to catch up with demand.The backup has since decreased in intensity but is still present, and will likely continue to be a kink in the delivery chain deep into 2022.

Understaffed shops

Don’t expect the royal treatment when you hit the shops this holiday season. Salespeople are likely to be even more overworked and stressed than they usually are during this time of year, as employers face massive staff shortages and are forced to place extra responsibilities on their workers. According to the Bureau of Labor Statistics most recent report, there are 10.4 million job openings in the U.S. right now, a number that has more than doubled since last year. Retailers are struggling to provide their standard level of service with fewer hands on deck, and the harried salespeople you encounter may very likely be doing the jobs of several workers.

Fewer deals and higher prices

Don’t count on finding super-hot deals this season while shopping to complete your gift list. In fact, the prices you’ll find on toys, clothing, electronics and other items will likely be higher than usual, thanks to factors like inflation, the rising cost of fuel and supply that falls well below demand. With shoppers eager to get their hands on the few goods that are available, retailers also have less of an incentive to offer promotions and steep discounts on any gift items. This isn’t the year to plan on shopping the sales to help you stay within budget.

Shop early

As a consumer, there’s not much you can do to fix the supply shortages and delays in shipping. What you can do, though, is shop early to avoid facing bare shelves and a delivery date that’s weeks past the holidays. In fact, suppliers and retailers are urging consumers to get started on their holiday shopping before Halloween this year to get the best selection at the best prices. If you’re the kind of shopper who doesn’t think about gift shopping until two weeks before the holidays, this may be the year to rethink your approach.

A scarcity in supply, delivery backups, staff shortages and high prices will likely make holiday shopping more challenging this year. However, by planning ahead and starting early, you can enjoy this season’s gift shopping and still stick to your budget.

Happy shopping!

Your Turn: How will your approach toward holiday shopping be different this year? Tell us about it in the comments.

Should I Trade in my Car Now?

by Advantage One, posted in Announcements, Budgeting, Convenience, Lifestyle, News & Events, Saving, Tips & Best Practices, Uncategorized

Q: I’ve heard that used cars can currently fetch a pretty penny from dealers because of a nationwide vehicle shortage. Should I trade in my car?

A: The auto market has been red-hot for months as manufacturers scramble to catch up on pandemic-induced supply shortages. While circumstances vary, this can be a great time to get top dollar on a used car. 

Here’s what you need to know about the current auto market for sellers.

How high did prices go?

According to online automotive resource Edmunds, the average transaction price for a used car in the second quarter of 2021 was $25,410, which is up 21% year-over-year. This was the first time the average list price for used cars in the U.S topped $25K. Also, fewer than 1% of used cars on dealership lots were priced below $15,000 during this quarter, compared to 18% offered below this mark the previous year. 

Why have prices of used cars increased so sharply? 

Several interconnecting factors have led to the increase in auto prices. 

First, the pandemic put a freeze on the production of new vehicles for nearly a full business quarter. Factory output at the time of the nationwide lock-downs was reduced by 3.3 million vehicles and sales dried up, which also reduced the volume of trade-ins. This led to a decrease in the available supply of used cars and led to a driving up of prices. 

With production on pause, chip-makers focused on the electronics industry instead of creating semiconductor chips for automakers. When production resumed, manufacturers faced a worldwide shortage of these chips, which experts predict will last well into 2022. Consequently, manufacturers have been limited in the number of new cars they can make. This, too, means there are fewer trade-ins and fewer used cars available for buyers, leading to an increase in prices.

A third factor that has influenced the fall in the supply of used cars is the months-long shutdown of business and leisure travel during the lock-downs. Car rentals were virtually unused at this time, prompting the agencies to hold onto the cars in their lots instead of selling them to used car dealerships. This, of course, led to a reduction in the number of used cars available for sale and contributed to the spike in prices.

Finally, the single factor unrelated to the pandemic that has decreased the supply of used cars is the fact that today’s used cars were manufactured during the Great Recession. During this time, automakers faced severe financial challenges and the number of cars sold during that time was far lower than average. Today’s dearth in used cars, then, is also a trickle-down effect of the Great Recession and now directly impacting the current auto market. 

Will the market settle down soon?

Auto prices are already showing signs of leveling off, with some used car prices dropping by as much as $2,000 over the month of July. Many drivers are eager to sell their cars at top dollar now, adding more used cars to the available supply. Car rental agencies are also recovering from their business freeze during the pandemic, adding their own vehicles to the available pool of used cars. While it will take some time for the market to recover completely, it does seem to be cooling off from its post-pandemic sizzle. 

Should I trade in my car now? 

If you plan on trading in your car sometime in the near future, you may want to do so sooner rather than later. With inventory still low, dealers are eager to get their hands on as many used cars as possible and will offer you more than you’d typically expect. Be sure to check what price you can get from several dealers before you sell. It’s equally important to note that those same inflated prices will work against you if you plan on buying a new car now. 

Used cars can fetch a pretty penny in today’s hot auto market, but it’s crucial to weigh all factors carefully before deciding if trading in your car now can work in your favor. 

Your Turn: Have you recently traded in your car? Tell us about it in the comments.