Online shopping sales are likely to experience the slowest growth in recent years after months of rising inflation and financial uncertainty for consumers.
Inflation is putting downward pressure on consumer confidence, with many Americans increasingly watching their spending as prices for everything from tech products to food skyrocket. As many people forgo unnecessary purchases, retailers have had to continually offer discounts to encourage customers to make purchases.
In many ways, this year's holiday shopping season is expected to be inverse compared to last year. While in 2021, consumers had to scramble to overcome supply line dysfunction to get what inventory retailers had, retailers may be competing for limited consumer spending in much the same way.
What the Experts are Saying
A number of different analyses have come out over the last week that generally seem to agree that retailers will experience a slower shopping season.
"The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week," said Patrick Brown, vice president of growth marketing and insights at Adobe. "Even though we expect to see single-digit growth online this season, it is notable that consumers have already spent over $590 billion online this year at 8.9% growth, highlighting the resiliency of e-commerce demand."
Adobe expects retailers to begin offering deals earlier in the season due to tighter competition and rising inventories.
ShipStation, a cloud-based ecommerce provider, released a holiday shopping trends report which showed that 58% of consumers expected to cut back on non-food spending this holiday season. If the prediction holds, this will reflect a 14% reduction in consumer spending during the holiday shopping season.
"Inflation and economic uncertainty are forcing consumers to rethink their spending priorities this holiday season," Robert Gilbreath, General Manager of ShipStation, said in a statement. "To combat this, merchants should proactively formulate a holiday season game plan. This includes re-examining and improving the experience they offer: from the moment an order is placed online through last-mile delivery."
In addition to Adobe and ShipStation, Deloitte and Columbia Threadneedle have also noted worsening conditions for the holiday season.
What Should Consumers Expect?
Because retailers are competing for a significantly smaller number of consumer purchases, it is highly likely that not only will sales come earlier in the shopping season but will likely come with deeper discounts than previous years. In addition to facing shaky consumer confidence, many retailers will likely be looking to avoid excessive inventory glut, as many already have significantly more stock on hand than they should.
Consumers might also notice some retailers closing for Thanksgiving due to the expected decrease in traffic. Target