With a couple of shopping days left, the success of this holiday season just depends.
It depends on the retailer, buyers’ household income, online or in stores, and now, at the very end, the weather.
After two holiday shopping seasons with the heightened chaos and heartbreak of the pandemic, this one is more normal.
But there’s always some form of the Grinch. This year, it’s inflation.
Grocery prices were up more than 12% year-over-year in October and November, forcing households to make choices about spending to put food on the table or buy more gifts.
Still, crowds returned to stores and shopping centers because they could. Online sales from Thanksgiving through Cyber Monday were up 4% from the prior year, with Black Friday sales increasing only 2%, according to Adobe Analytics. The smaller increases matched the pre-pandemic pace.
It’s fair to say this year’s overall excitement factor didn’t wow shoppers.
“There was nothing really new and exciting. No fever pitch or fear of missing out,” said Marshal Cohen, chief industry adviser at NPD Group. “We’re not even worried that packages aren’t going to be delivered on time.”
Cohen, who has followed the holiday shopping season for 23 years, called this one a bit more “blasé” because it didn’t come with a must-have new toy or electronic device. The Barbie Dreamhouse and Apple 14 are likely on wish lists, but nonetheless familiar.
It was a season of one ubiquitous sale after another starting in October. And it followed a couple of years when Americans spent a lot on themselves and their homes.
“If you bought it during the pandemic, you don’t need it again,” Cohen said.
The National Retail Federation and other forecasts have pinned the seasons’ retail sales gains in the range of 6% to 8%, excluding autos, gasoline and restaurants. That’s above the robust holiday sales increase of 13.5% in the combined November and December season in 2021. The forecast matches the rate of inflation.
Job availability and the economy were humming, and gasoline prices fell below a year ago – factors that normally would translate into disposable income. But for the majority of U.S. households, especially those in lower- and middle-income brackets, inflation still hurt the budget.
Consumers are coping with higher prices by shopping sales more often, switching to store brands and generic products and using coupons, said Phil Rist, analyst at Prosper Insights & Analytics. Customers of Walmart and Target were more likely to be taking those steps, according to Prosper’s December surveys of consumers.
Since last summer, Walmart CEO Doug McMillon has been saying that its stores were seeing higher-income shoppers – households with $100,000 or more – looking to save money on groceries. This month, in an interview on CNBC, he said the trend continued.
Finally, more people feel comfortable about gathering and traveling this year, drawing spending away from gift buying, Cohen said. Consumers said they planned to buy fewer gifts this year, an average of nine versus 16 in 2021, according to a Deloitte survey.
Discounts also haven’t been that steep yet, Cohen said. “Retailers haven’t blinked. But there should be more 50% and 60% off discounts after Christmas.”
It’s going to be a while before the season is tallied. Retailers begin reporting their holiday results in February. The fiscal fourth quarter for the industry ends with January to take in after-Christmas shopping and account for gift returns.
