In 2021, amid a worldwide supply-chain fiasco, retailers were worried about not having enough product in stores for the holiday shopping season. A year later, as they try to draw inflation-battered shoppers, retailers are worried about having too much.
In 2021, amid a worldwide supply-chain fiasco, retailers were worried about not having enough product in stores for the holiday shopping season. A year later, as they try to draw inflation-battered shoppers, retailers worried about having too much.
Higher gas and grocery bills and fears of a downturn risk steering spending away from traditional holiday purchases toward household essentials. Any sales that retailers do make could be watered down by the strengthening dollar DXY, +0.83%, and earlier promotional sales — such as those from Amazon.com Inc. AMZN, -5.00% and Target Corp. TGT, -5.47% — could thin the traditional stampede that starts on Black Friday.
Adobe Inc. ADBE, -2.31%, which tracks online shopping trends, on Monday said it expected U.S. online sales of $209.7 billion through the beginning of November and the end of December. That’s a 2.5% gain from last year’s holiday season, the lowest growth rate since 2012. For now, analysts say holiday sales growth is likely to be slower this year in part because retailers face tougher comparisons to last year. During last year’s holiday season, wage increases and savings were still fat enough to drive spending, even as traffic jams at ports and warehouses left everything from Care Bears to Pelotons stuck in containers and pushed prices higher.
He also noted that much of retailers’ unsold goods was likely brought in at a much higher cost several months ago. Retailers’ gross margins, he said, would likely suffer through the first half of next year. Adobe said that as retailers deal with oversupply and diminished consumer spending power, prices for computers sold online could be cut as much as 32%, far more than 10% in 2021. Discounts for toys could reach 22%, up from 19% last year. For electronics, the discounts could run as much as 27%, compared to 8% last year. Those would be all-time highs for the three categories, Adobe said.
“I think what we’re going to see is a slight increase in dollar sales,” said Spencer Schute, principal consultant at Proxima, a consulting firm focused on supply chains. “But if you look at it in terms of a volume perspective, we’re going to see a slight decrease in volume.” “We’re working so that we can afford a holiday,” said Rex Evans, 61, who guides incoming jets to gates at that facility. “A lot of these associates can’t afford a holiday. A lot of associates have second jobs.”
Through the back to school season, he said, workers were flooded with extra inventory and scrambled to move product to the sales floor. But space there and in the store’s back room was packed tight, which complicated the task of maneuvering pallets and shipments and finding space for product.Ryan, who has worked at Target for more than five years and is also the founder of Target Workers Unite, a worker advocacy group, said the inventory deluge had slowed since then.