Employee Nando Martinez (right) shows off a roll-up keyboard at Professor Toy at Fresno's Villaggio Shopping Center. The owner has been in business for 32 years. Left is Josh Mitchell. Photo by Edward Smith

The 2021 holiday shopping season is set to be one for the ages. Consumers are flush with cash and have an appetite for purchasing. After a 2020 holiday season with their doors closed, retailers are reporting record sales. But labor shortages and inventory woes could lessen the impact of those extra dollars as the pandemic continues to strain the economy.

After 32 years of business, Rob Fox, owner of educational-toy store Professor Toy in Fresno’s Villaggio Shopping Center, says he has a deep network of vendors to rely on to keep his shelves stocked with “off-the-wall products.”

“We’re not going to get everything we’ve always wanted, but we’ll be able to find other sources of other product and always have something different,” Fox said. He had to dig deep to engage vendors throughout the country to have lots of options for shoppers.

Ordering for Christmas begins in March and April, says Fox. He uses the “SWAG” method to determine what’s going to be popular, the “scientific, wild-ass guess,” Fox says.

This year, what’s been hot has been a battery-free crocodile toy they keep at the register. After several dozen units were purchased, they are down to only a handful left. Children have also shown a lot of interest in fidget-style toys that keep them busy while traveling, say Nando Martinez and Mitch McMeen, who have worked at Professor Toy for several years. Science kits, especially rock collections, are becoming popular again too.

Fox said he noticed a pickup in sales and anticipated a busier-than-normal holiday season by increasing orders 33%. Still, an estimated 75% of orders aren’t shipping complete. He might order a dozen of a specific toy and only nine will show up, with the remainder still floating somewhere with an unknown arrival time.

“You just have to cross your fingers that it will come in time,” Fox said.

John Talbott, director for the center for education and research at Indiana University’s Teleschool of Business, said major retailers are rethinking their Black Friday strategies.

Sales for the holiday season will be less promotionally driven and focused rather on creating demand around items stores already have.

This means for business owners, they have to find ways to market what’s already in inventory.

Tech giant Adobe released its holiday shopping forecast, predicting a record $207 billion in U.S. sales this year. At the same time, out-of-stock product messages have risen by 172%.

Adobe also forecasts that discounts will be in the 5% to 25% range, compared to a historical average of 10% to 30%. Consumers will pay 9% more on average during Cyber Week compared to 2020’s holiday season.

With limited inventories, it doesn’t make sense to offer discounts, says Talbott.

For shoppers looking for discounts, that means a tougher time finding deals.

One area Talbott could see discounts are on items retailers ordered earlier in the season that arrived late. Seasonal items such as shorts may not have come in until fall and business owners may want to get them off the shelves to make room for more timely product.

Gift cards will also be big, Talbott anticipates. They will enable shoppers to spend money during the holidays and not have to settle for what’s in stock.

For businesses, reporting gift card sales is tricky. For the most part, publicly traded companies report gift card sales when they are redeemed, with gift card purchases reported as liabilities at the front end. So if gift cards are widely purchased this season in lieu of actual goods, a lot of investor calls may show lower-than-expected sales reports than what actually occurred. Those sales won’t be reported until 2022 when the gift cards are used.

For small businesses that report cash collected, that still means money in the bank.

At the labor end, businesses are still clamoring for helping hands. And small businesses will be hardest hit. Nationwide brands can offer incentives that many small businesses can’t match.

In a bid to hire 28,000 seasonal workers, Nordstrom announced hiring incentives for up to $2,500, according to the Puget Sound Business Journal.

Gap, Inc., which includes Old Navy, Banana Republic and Athleta, offered flexible work hours, giving employees the ability to choose which hours and days they prefer to work.

Business owners are waiting to see what November will yield for them in terms of sales.

The Black Friday shopping event has become less and less relevant as it has turned into more of a weeklong phenomena. And with shortages, deals are beginning earlier, Adobe reports.

Business owners are hoping what they have will match what consumers want.

“You have to take risks, that’s the way you do retail,” Fox said.