For over a year, Floridians have experienced firsthand the changes, challenges and, in many cases, frustrations that arise when a pandemic affects global trade. Headlines about container ships waiting off the west coast or tight supply chains become very real experiences for the everyday consumer when a visit to the local grocery store leads to disappointment as poultry, Preserves and juice drinks are getting harder to find or prices are going up. From the remote seaport to the local grocery store, the past year has been a testament to the many ways in which challenges with international or national supply chains can quickly spill over to the local level.
Many Floridians have faced persistent product shortages on store shelves and online as the pandemic continues to spread and disrupt global supply chains at a time of skyrocketing demand. These disruptions and resulting delays are foreseeable for the foreseeable future, but they also underscore the importance of future supply chain resilience for Florida.
Bottlenecks and trade shortages still characterize global value chains as economies struggle to increase production. The pandemic has exposed the trade-off inherent in interconnected supply chains on a global scale. At best, international supply chains can reduce business costs; However, vulnerability to large-scale disruption can quickly destabilize product movement, increase business costs, and hurt the customer experience.
When it comes to retail sales, a combination of social distancing requirements, lockdowns, fewer tourists and consumer preferences has made the pandemic-induced recession particularly difficult for retailers in Florida. In April 2020, monthly retail sales fell 21.9% year-on-year from 2019. Although retail sales returned to positive percentages year-over-year in the summer of 2020 , sales remained depressed the rest of the year and never eclipsed 10%. until early 2021.
E-commerce sales, as a percentage of total retail sales, reached 15.7% in the second quarter of 2020 and have since stabilized at around 14% throughout 2021. By comparison, in 2017, e-commerce accounted for only 8% of total retail sales. sales after adjustment for seasonality. Certain product categories will be among the biggest beneficiaries of the expansion of online shopping. Clothing and accessories, food and beverages, as well as health and personal care products have experienced, and are expected to experience, one of the fastest growing e-commerce sectors as the ongoing recovery continues to unleash pent-up demand .
Changing consumer behavior and changes in retail will have a noticeable impact on state and local government tax revenues. During the 2020-2021 legislative session, the Florida legislature passed, and the governor subsequently signed, a new law that would require most out-of-state market sellers to collect and remit the tax. sales tax on the sale of products and services to residents of Florida. As noted in a previous Florida TaxWatch study, the distance sales tax will promote fairness by leveling the playing field for Florida businesses competing with out-of-state sellers.
From supply chain to point of sale, the Florida customer experience will be constantly evolving. When national supply chains grapple with labor shortages, a lack of supplies, or transportation challenges, some food items can be hard to find on the shelves in some stores. Or when international supply chains are dealing with closed ports or production that has not yet increased, some products may be behind schedule. These persistent challenges for value chains intersect with changing consumer expectations for safety and convenience, which is increasing the uptake of online shopping. While some of these changes and challenges are beyond Florida’s control, it is imperative to prepare for future disruptions by bolstering the state’s production and manufacturing capacity to meet customer demands in a timely and efficient manner. effective.
Dominic M. Calabro, President and CEO of Florida TaxWatch and Jonathan Guarine, Research Economist of Florida TaxWatch. You can find the full report at FloridaTaxWatch.org.
This article originally appeared on Florida Times-Union: Guest Column: Beyond the Pandemic – Long-Term Changes for Florida Supply Chains