Holiday sales are making a comeback, bringing a measure of relief to inflation-pressured American shoppers.
Tech gadgets and sporting goods will see “huge” online discounts, with the best deals likely in late November, Adobe Analytics said in a report Monday. Walmart Inc. is already promoting deals on computers, toys and air fryers this week, while Amazon. com Inc. will start a two-day “early access” sale on Tuesday. Target Corp.’s weekly Black Friday deals have begun.
Retailers are racing to take advantage of seasonal demand as they struggle to reduce inflated inventories, and have no choice but to offer price cuts in stores and online to entice consumers who have been hit by rising price inflation. this year. That’s a big change from 2021, when relatively affluent shoppers snapped up goods amid fears that transportation woes would produce shortages.
“Last year, there weren’t a lot of products and retailers didn’t need to discount,” said Brian Yarbrough, an analyst at Edward Jones. “Fast forward to this year and we are in the exact opposite situation.”
Online holiday sales from November 1 to December 31 are projected at $209.7 billion, Adobe said, just 2.5% more than a year ago. That pales in comparison to last year’s 8.6% increase. And given the expectation that the US annual inflation rate will be around 8%, many retailers may see fewer sales this year, albeit at higher prices.
Part of the reason for the poor outlook for November and December is that retailers are trying to persuade customers to start shopping early.
Amazon’s “Preferential Early Access Sale” is expected to drive some spending, just as the company’s Prime Day in July drove a rising tide for all retailers, said Taylor Schreiner, senior director of Adobe Digital Insights.
Another drag on holiday spending is that shoppers have less money for discretionary purchases as inflation forces them to spend more on essentials like fuel and groceries. Americans are also taking more trips this year as the coronavirus pandemic subsides.
“If they’re traveling, that lowers their spending on holiday gifts,” said Marshal Cohen, senior industry adviser at NPD Group. “And even the cost of Thanksgiving and Christmas meals will go up 25% or more for many people. ”
Adobe’s dovish outlook for holiday sales is consistent with what other industry watchers have predicted. Deloitte also predicts a slower season as inflation takes its toll.
Retailers hope the price cuts will rekindle shoppers’ interest in items that have been sitting on shelves, including electronics and household items. Best Buy Co. will kick off a two-day sale Tuesday with discounts on Apple Inc. televisions, headphones and laptops.
Increased promotional activity will put further pressure on the results of large retailers, many of which have already cut their profit forecasts. Some companies may get a little cost relief as transportation bottlenecks are eased, reducing pressure on margins. But it will be hard for them to avoid joining the rush to lure discount shoppers.
“It’s a given, everyone is going to promote,” said Gabriella Santaniello, founder of retail consultancy A Line Partners. “It’s going to come from everywhere.”