Sep 13, 2022 - Economy & Business

Discounts could fuel unprecedented holiday shopping season

Illustration of a trend line pointing downwards with a shopping cart.
Illustration: Allie Carl/Axios

Retailers are preparing for an unprecedented holiday shopping season and could need to offer more discounts to lure inflation-wary shoppers.

Why it matters: “This is the first holiday season amid a consumer slowdown and high inflation for many years, so there is no recent precedent to learn from,” GlobalData managing director Neil Saunders told Axios.

Driving the news: After years of booming, double-digit online growth, this year sales are expected to rise 9.4% to $1 trillion, Bloomberg reports, citing Insider Intelligence’s forecast.

  • Bloomberg also reported that some Amazon third-party sellers fear they could have to cut prices "to move a mountain of unsold inventory."

Meanwhile, economists at Deloitte have a different forecast and predict growth of 13.5% in e-commerce sales this holiday season, pushing sales up to $262 billion, according to a new report out today, Axios’ Kate Marino reports.

  • The expected e-commerce growth is in stark contrast to overall holiday sales, which Deloitte estimates will grow by a smaller 4%–6% — less than the current annual inflation rate (8.5%).

By the numbers: Consumers say they will spend less as they watch their budgets.

  • 41% of Americans are planning to spend less this holiday season compared to 2021, according to a recent survey by Trustpilot, a consumer reviews platform.
  • Nearly 30% plan to reduce holiday spending by up to 20%, but 20% plan to reduce spending by more than 50%.

What they’re saying: “In the face of economic uncertainty, Americans are ditching wants for needs, pulling back on luxury spending, and looking for a way to make their dollar go further,” Bob Carpenter, president and CEO of GS1 US, told Axios.

  • “This is going to be a tough holiday year for businesses and consumers off the back of high inflation, labor shortages in both warehouses and storefronts, plus other persistent issues crippling retail supply chains such as sourcing,” Carpenter said.
  • Spencer Shute, senior consultant at Proxima, said it could be a mixed bag as to how much of a discount retailers can offer.
  • “It may be about the same in terms of percentage, but the overall price point could still be higher compared to previous years, given the inflation,” Shute said.

Our thought bubble: All retailers, big and small, have had trouble predicting the right inventory in the right amounts throughout the pandemic and inflation has added another level of pain as even the right stuff wasn't at the right prices, Axios’ Hope King reports.

The bottom line: Shopping early is one tactic to save money with retailers continuing to mark down prices on excess inventory.

  • But remember, most markdowns are for merchandise that has been sitting in stores — not the new items — and you need to worry about return policies if you change your mind on purchases.

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