American shoppers to "trade up" during the holidays
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Americans are expected to "trade up" on online holiday purchases as retailers deepen discounts, data out Wednesday from Adobe Analytics suggests.
Why it matters: Trading up — or opting to buy a more expensive option of a product — is a reversal from the act of trading down, which is what many consumers have been choosing to do in light of high inflation.
Driving the news: The share of total goods sold during the holidays that come from the most expensive price points is expected to grow by 19%, compared to pre-season levels, according to Adobe Digital Insights.
- Sporting goods, electronics and appliances are expected to see the strongest rise in trading up behavior, with apparel and toys seeing a more subdued rise.
What they're saying: "Because there's discounts happening significantly across the board, including on premium and luxury goods and higher-tiered priced items, that affords more consumers — especially consumers who are looking to give gifts for family and friends — an opportunity to trade up," Vivek Pandya, lead analyst at Adobe Digital Insights, tells Axios.
- For example, consumers may be more willing to buy more premium OLED TVs or opt for name brand golf clubs, he adds.
The big picture: Discounts lead to sales, which is good news for businesses.
- For every 1% price drop during this year's promotional events such as Prime Day, Memorial Day and Labor Day, demand increased by 1.025% compared to the year prior, which translate into an incremental $305 million in online spend.
- For the upcoming holiday season, Adobe expects consumer response to discounts to contribute an incremental $2 billion to $3 billion.
What we're watching: Overall online sales are expected to reach $240.8 billion in total this holiday season, defined by Adobe as starting from Nov. 1 through the end of the year.
- That marks an 8.4% growth over last year and an acceleration in yearly growth from 4.9%.
- But it doesn't account for all the earliest sales that big brands, including Walmart and Amazon, are launching starting in October.
