This upcoming holiday season for retailers presents a mixed picture.
SLOWER GROWTH…
Despite inflation moderating, supply chain challenges improving, and pandemic restrictions easing, the forecasted growth in retail sales is expected to be slower than the previous year. Deloitte’s September report estimates a 3.5% to 4.6% increase in retail sales during the holidays compared to 2022, reaching between $1.54 trillion and $1.56 trillion. This is a deceleration from the 7.6% growth seen in the previous year when sales reached $1.49 trillion. Online-specific sales are predicted to reach $232 billion, growing at 8.4%, according to Forrester.
…BECAUSE OF INFLATION…
While shopping budgets are expected to surpass pre-pandemic levels, consumer confidence remains a challenge. Shoppers anticipate higher prices, influencing their spending behavior. Inflationary concerns are reflected in the expectation that goods will cost more, leading to plans for buying fewer gifts. The competition among retailers is intensifying as they vie for cost-conscious consumers, potentially leading to pricing pressure. Early promotions and deals may impact traditional shopping events like Black Friday and Cyber Monday.
…BUT AT LEAST CONSUMERS HAVE MORE CHOICES
Despite these challenges, there is enthusiasm for non-gift purchases, with a focus on decorations and outfits for holiday parties. Different income groups show varied spending intentions, with millennials playing a significant role in holiday sales. The shopping landscape continues to evolve, with a growing preference for omnichannel shopping. E-commerce sales are expected to rise, but retailers face the challenge of standing out in a crowded market, especially as traditional promotional events like doorbusters become less appealing to consumers.
