Consumers Are Expected To Cut Holiday Spending This Year
(PatriotWise.com) – Retailers struggling for months to offload excess inventory are growing concerned that soaring inflation and dropping consumer confidence may dampen demand for holiday shopping, even online where consumers have been doing most of their shopping in recent years.
As it is, retailers have been scrambling to move inventory after miscalculating what shoppers would want after the pandemic. The drop in consumer sales due to inflation has retailers further slashing prices to get consumers to buy. Their only hope to boost holiday spending is to begin offering deals earlier than usual.
According to Patrick Brown, vice president of growth marketing and insights at Adobe, which uses retailer transaction data to make annual forecasts for online holiday sales, this year’s holiday season could begin with early discounts in October.
Adobe forecasts that online Black Friday sales are expected to increase by only 1 percent over last year while Cyber Monday revenue is projected to increase by 5.1 percent.
Overall, Adobe forecasts that online holiday spending is likely to grow by only 2.5 percent, the smallest increase since Adobe began tracking in 2015. Adobe also warned that there may even be a potential decline in sales from between 2 and 5 percent.
Last year’s holiday shopping got off to an early start, mostly as consumers were scrambling to make sure gifts arrived on time as the supply chain bottlenecks caused shortages and delays in shipping.
This year’s earlier start, however, isn’t due to a supply chain problem. Instead, retailers are having to get rid of inventory while competing for customers who are less likely to spend as much. By beginning discounting earlier, spending may be spread out more this holiday season than in the past.
And while inflation isn’t affecting online buying as much as it is on supermarket shelves, it is still having an impact on e-commerce. A recent survey from KPMG found that 85 percent of holiday shoppers are concerned about inflation and 34 percent will likely opt for cheaper holiday gift purchases this year.
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