noT so greaT exPeCTaTions for The holidays

In fact,

Holiday shoppers will opt for coupons, discounts and sales, buy less, or opt for cheaper brands to save money.

Retailers don’t expect big sales for the holidays

Smaller budgets translate to less sales volume

Zoe Landi Fontana, The Weekly Journal

There’s no way to escape retailers’ early onslaught of holiday cheer, but shallower pockets may mean trouble as inflation continues to negatively impact businesses. Due to financial worries, shoppers will be thinking twice before making purchases.

This year, shoppers’ budgets may be smaller as a result of having to budget extra for everyday essentials due to inflation. According to the US

Bureau of Labor Statistics’s most recent report, the food index increased 11.4% over the last year, representing the largest 12-month increase since May 1979. A Jungle Scout Consumer Trends Survey reported that 84% of respondents indicated that inflation has affected their spending, with over another half reporting unstable household income. With everyday goods and groceries taking an ever-increasing portion of household budgets, businesses should plan for selling less inventory in the last quarter of the year, albeit earlier than usual. Creatopy, an ad creation platform, found that 29% of people plan to shop a month early and 20% plan on starting two months earlier.

For retailers in Puerto Rico, who are still experiencing the effects of the Covid-19 pandemic, the situation got even more complicated with the passage of Hurricane Fiona. “Expectations for the Christmas season are not of economic bonanza, like in the past, even more so when we consider the spiraling inflation,” said Lourdes M. Aponte, president of the Puerto Rico United Retailers Center (CUD, for its Spanish acronym). To the situations affecting retailers throughout the island–lack of power, lost inventory due to flooding…– Aponte highlighted the fact that consumers’ behavior and priorities, have changed. She admitted that an increasing number of consumers opt nowadays to do their shopping online.

“We have to consider the generational shift. People prefer now the convenience and speed of online shopping. That is one of the challenges affecting retailers today,” Aponte said. “We’ll have to see how this situation [the hurricane’s aftermath] develops from here to December. But I can anticipate sales will be the same as last year’s.”

People are adapting their spending habits to reduce the cost of their purchases. This year’s holiday shopper has a smaller budget and is less loyal to brands. Bankrate, a consumer financial service company, reported that shoppers will opt for coupons, discounts and sales, buy less, or opt for cheaper brands to save money.

Thrifting is another way to save. It’s a more economical and sustainable way to shop, most popular amongst Gen Z and millennial consumers. A survey by Jungle Scout Consumer Trends showed that, of the survey’s 1,000 participants, 25% plan on purchasing a used item to give as a gift. The trend, which started prior to the Covid-19 pandemic, continues to increase in popularity.

Predictions For Holiday Sales

As a result of the economy’s slow down, holiday sales are expected to experience little growth this year. Deloitte predicts holiday sales in the U.S. will total $1.45 to $1.47 trillion from November to January –a 4% to 6% increase from last year– although inflation will raise dollar sales while retail sales see little increase in volume. “As inflation weighs on consumer demand, we can expect consumers to continue to shift how they spend their holiday budget this upcoming season,” said Nick Handrinos, vice chair, Deloitte LLP, and US retail, wholesale and distribution and consumer products leader.

Online sales will grow as shoppers search for better deals to stretch their dollar further. Deloitte predicts e-commerce sales to grow by 12.8% to 14.3% year-over-year this holiday season.

“Retail sales are set to increase as a result of higher prices, and this dynamic has the potential to further drive e-commerce sales as consumers look for online deals to maximize their spending. Retailers across channels who remain aligned with consumer demand and offer convenient and affordable options can be well positioned for success this season,” explained Handrinos in a press release.