According to the Nation Retail Federation, US holiday spending, especially during winter, hit an average of $997.73 per person in 2021. But amidst rising inflation and living costs, market leaders worry that US holiday sales might fall short of expectations.
However, Adobe’s annual holiday forecast notes that US consumers are likely to spend more shopping online, as they try to get the best value for their budgets.
Inflation and its effect on US holiday spending
Vivek Pandya, the lead analyst at Adobe, states that US holiday spending will be contingent on consumers sticking to their budgets. In 2021, consumers were flush with cash as they had also received stimulus checks. However, this year, rising fuel and food prices have eaten into household budgets. Online spending is expected to rise by around 2.5%, and Adobe estimates the highest holiday sales growth between November 1 and December 31.
Forbes has discovered that customers will not be buying brand-name products blindly. Rather, US holiday sales will be centered around products that make everyday lives easier and more efficient for their users. People are also expected to cut back on non-food expenses, with clothing and footwear being the biggest losers. Experts estimate that US holiday spending statistics will show a drop of almost $30 billion, as nearly 58% of budget-conscious customers tighten their purse strings.
Analysts estimate that the US holiday spending has already begun, as customers spread out their shopping over the coming months to avoid financial strain. Retailers have also started offering discounts to clear out inventory that has stockpiled in the last few months.
Currents Trends: The Past and The Present
Holiday shopping is when customer service faces their yearly trial by fire. In comparison to 2021, discounts abound in 2022. Adobe predicts record discounts of over 32% as retailers look to clear out surplus inventory.
Also, Cyber Monday, which falls on November 28 this year, is expected to be the biggest shopping day online this year. Finance Online reported retailers are expecting holiday sales growth to hit record highs, and to touch around $11.2 billion, a 5.1% year-on-year increase in comparison to Black Friday sales. In 2021, shoppers spent $10.7 billion for Cyber Monday, $100 million less than the record-high of $10.8 billion the year before. Online sales on the biggest Monday of the year had grown with every passing year from 2018, before faltering slightly in 2021.
Adobe also predicts that the buy now, pay later (BPNL) will decline this year, after seeing significant growth in 2021. According to their study, in the first nine months of 2022, BPNL has only grown by about 5%.
The National Retail Federation (NRF) predicts that holiday shopping will peak on the last Saturday before Christmas. According to a September 2022 poll conducted by NRF and Prosper Insights & Analytics, 45% of holiday shoppers say they are likely to browse and buy in stores on Black Friday this year. The annual survey also showed that customers are keeping an eye out for promotions and sales, with 58% admitting that they monitor these while shopping for gifts and other items. This is a 10% rise from 48% who admitted to this in 2021.
Rising costs have impacted holiday shopping with customers planning to use different ways to supplement their income, including savings, credit card debt, and selling assets. The NRF also noted that retailers have taken steps to avoid supply chain issues and started preparing for the holiday season well in advance.
As customers step out with tighter budgets, it is up to the brands to build user-friendly experiences that balance human interaction with technology.
