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NEW YORK — Reports on the retail outlook ahead of the crucial year-end holidays have found shoppers feeling thrifty as inflation pushes up prices for groceries and other daily essentials. The mood has retailers preparing for modest growth in holiday sales, with gains driven largely by inflation.
“This holiday retail season is bound to be far more promotional than the last,” Steve Sadove, senior advisor for Mastercard and former chairman and chief executive officer at Saks Inc., said in unveiling the Mastercard SpendingPulse annual holiday forecast for 2022, which foresees a 7.1% increase in U.S. retail sales excluding early start to automotive. An early start to the holiday season was expected as shoppers began hunting deals, according to the report.
“Retailers who were able to clear past merchandise and accurately forecast inventory needs will be the best positioned for growth,” Sadove said.
Mastercard SpendingPulse predicts strong growth in apparel sales as people return to pandemic social and work routines, and foresees relatively strong sales of luxury goods.
Deloitte’s annual holiday retail forecast calls for a spending increase of between 4% and 6% in 2022. Overall, Deloitte’s retail and consumer products practice projects holiday sales of between $1.45 trillion and $1.47 trillion from November to January. By comparison, holiday sales increased 15.1% in the year-earlier time frame.
Deloitte forecasts year-over-year e-commerce sales growth of between 12.8% and 14.3% to reach holiday sales of between $260 billion and $264 billion this season.
“The lower projected growth for the 2022 holiday season reflects the slowdown in the economy this year,” according to Daniel Bachman, Deloitte’s U.S. economic forecaster. “Inflation will help to raise dollar sales, although retailers will see less growth in sales volume.
Deloitte sees retail sales further eroded this season by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending. But the firm anticipates increased spending on consumer services, such as restaurants, as the effects of the pandemic recede.
The NPD Group, in its recent survey of consumers’ holiday purchase intentions, found that while the majority of shoppers planned to spend the same or more this holiday season, the share of consumers expecting to spend less increased over last year.
“Consumers are ready to get out and celebrate over the 2022 holiday season, but last year’s optimism has taken a beating as financial concerns have them feeling a bit more grinchy this year,” Marshal Cohen, chief retail industry advisor for NPD, said in releasing this year’s report. “Despite economic challenges, consumers still have just as many friends and family members to shop for during the holidays; they will just be spending differently.”
Among takeaways from NPD’s report:
• One in five holiday shoppers say they will spend less over the holidays because their economic situation has changed.
• About one in eight consumers will be spending less on gifts so they can spend more on holiday entertaining-related expenses, like food, drink and decorations.
• The number of consumers planning to do holiday shopping online fell from 85% last year to 80% this year — the largest shift favoring stores in years.
• Plans to shop mass merchants grew the most from 2021, while plans for pure-play e-commerce shopping declined most.
• Consumers expect more (46%) of their holiday purchases to be made at brick-and-mortar locations than through retailers’ apps and websites (45%), a downshift from last year, when shoppers indicated they planned to do half of their holiday shopping online.
• Among those who are planning to consult social media for holiday shopping ideas and information, TikTok is the only one of the top four platforms likely to see increased engagement.
“Early season promotional events will help consumers to spread out their spending, while also setting the stage for a more spread-out holiday shopping season,” according to NPD’s Cohen. “Navigating this year’s fluctuating shopping dynamics will require patience and persistence with the consumer, and a perspective on the holiday season that extends beyond the traditional retail definition.”
