Why the Christmas rush in October?

Staci West 26/10/2021 in Millennials

’Tis the season to start Christmas shopping. Yes, really. A recent report from Klarna found that 40%* of consumers are starting their shopping earlier this year. “But it’s only October!”, I hear you say, “What’s the rush?” One big reason: shortages. Not only are businesses dealing with a shortage of workers, but global supply chain disruptions continue. Most of our holiday spending relies on supply chains and product availability can suffer if they break down anywhere along the line. This includes things like cargo ship jams and a lack of lorry drivers. And the knock-on effect? A very expensive holiday season if you want to avoid disappointment.

“The best way to spread Christmas cheer is singing loud for all to hear.” — Elf

Supply chains: it’s simple Claus and effect

Global supply chains have been making headlines for months now. When the pandemic struck, factories and ports around the world shut down. That led to supply shortages. Increased time at home, followed by a much-anticipated reopening, has led to high demand. This, combined with labour shortages, has jacked up prices on pretty much everything!

FundCalibre’s Darius and Juliet talked more about supply chains and the ‘perfect storm’ in the UK, on last week’s Investing on the go podcast.

And it’s not just lorry drivers who are feeling the pressure. Deliveries and postal services are also expected to feel the heat during the festive period and will likely raise rates to accommodate the level of packages. So, if you’re mailing any Christmas parcels this year, the earlier the better.

Staying on budget without being a Grinch

Labour shortages and supply chain issues are predicted to make this holiday season more expensive than ever. But staying on budget during the holidays can be hard, even in normal times. My general rule of thumb is I aim to spend between 2-3% of our annual household income on the holidays. This includes everything from gifts and food to decorations.

According to Klarna, 80%* of consumers plan to buy online this year, which shouldn’t be too much of a surprise. One benefit of shopping online can be cost comparison and maximising offers to get the most for your money. However, Christmas shopping for some can mean extending the credit limit a little too much, only to be faced with a shocking bill in the New Year.

Fintech companies, like Klarna, allow you to spread your payments interest free across 3 months. Similarly, Barclays – a holding in Schroder Recovery** and Threadneedle UK Extended Alpha** – is getting on the ‘buy now, pay later’ bandwagon, and is extending a deal with Amazon to arrange loans to cover purchases on the platform.

Buy now, pay later deals have exploded during the pandemic, with some saying it’s the future of millennial finances. But it has also stoked fears that it’s encouraging unsustainable spending and reliance on debt. When used responsibility I think these options can be good for consumers where the alternative may be a high interest credit card. But personally, I have a long and trusted relationship with American Express – a holding in AXA Framlington American Growth** and Ninety One Global Special Situations*** – for my ‘above average’ shopping habits shall we say…

Ultimately, being proactive this year in particular, could save you money and lessen anxiety about empty shelves. And don’t forget to pick up things like wrapping paper and tape while you’re out shopping!

*Source: 2021 Holidays Unwrapped, Klarna
**Source: fund factsheet, 31 August 2021
***Source: fund factsheet, 30 September 2021

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.