It’s no secret that the shopping season increases around Christmas time. There are many reasons for this, but the most prominent one is the increased need for the gifts people buy for their family and friends. The other reasons are increasing gas prices and the rising cost of food. However, Millennials are beginning to take up the sport of shopping again, and this trend is expected to continue.
In the wake of the flu pandemic and global supply chain issues, retailers are struggling to fill orders. They are also under pressure from higher costs and uncertain demand. As a result, inventory pressure is a driving force for Christmas shopping this year.
Inventory levels are high in many categories. For example, apparel and accessories and department stores have the highest inventory ratios.
Some retailers are also purging outdated items. This is to free up space in their warehouses. Promotions are also being used by winning retailers to clear away excess merchandise.
Some retailers are also increasing base prices in many categories, including clothing. This is in anticipation of rising commodity costs. Consumers are also responding to the price increases by trimming their spending.
Some retailers have even taken to limiting price increases on their everyday purchases. This is due to the rise in transportation and commodity costs.
This year’s holiday shopping season may not be quite as big as last year’s. But retailers say they are optimistic about the future. They are already starting to ramp up Christmas-oriented marketing. Some retailers are also putting up sales events in October.
A recent survey by Adobe Analytics showed that online spending for the US holiday season may be the smallest in eight years. However, the question still remains as to whether or not inventories will stay at Goldilocks levels.
Some companies are betting that their sales will be higher than expected, while others are taking the more conservative route. In addition to limiting promotions and base prices, many are also reducing discounts. This has the potential to frustrate shoppers.
For many retailers, a record amount of inventory is causing a number of headaches. While retailers are anxious about the prospect of an inventory hangover, they also want to get ahead of the competition and have a head start on their holiday sales.
A significant part of holiday shopping happens during Black Friday through Cyber Monday. These sales increased last year, generating $730 billion in total retail sales. But in the face of new challenges, US retailers are once again facing a challenging holiday season.
A major concern for consumers this holiday season is the speed of delivery. There are several ways retailers can speed up delivery. Some retailers offer same-day or next-day delivery. This allows shoppers to get gifts delivered the same day they purchased them. However, this is not guaranteed during peak times.
A majority of U.S. consumers are worried about spending too much. They are also concerned about being too close to other people in stores. This has caused more shoppers to shop online.
Retailers have also been challenged by global supply problems. For example, many countries that supply goods to the U.S. had their factories shut down, which impacted the supply chain. These disruptions have prompted retailers to create new strategies for getting products to online shoppers.
Another major concern for consumers is rising prices. This is driven by rising energy costs and transport costs. Inequalities are growing as a result. In many parts of the country, consumers are experiencing food and energy poverty.
The holidays are a time to spend with family and friends. But with the rise of internet retailers, consumers are also looking for ways to make their purchases more convenient. Some urban areas are offering same-day delivery. Other shoppers are using coupons and promotional emails.
One major challenge for retailers is the number of non-essential shops that closed before Christmas. These shops faced staff shortages and had a hard time competing with online sales.
Rising prices for gas and food
The cost of fuel and food is set to rise this holiday season. The Consumer Price Index, an economic indicator, says consumers are paying 5.5% more on average than they did last year.
For example, gas prices are up 25 cents a gallon compared to a year ago. While the prices on other energy items have also spiked, the biggest contributor is gas.
In addition to gas prices, food and drink costs are on the rise. One of the reasons is climate change. Another is war in Ukraine.
There are some ways to combat rising prices. For example, a couple in Atlanta has had to make some hard choices this holiday season. They’re limiting their errands to two days, but they’re also looking for bargains.
One company, GasBuddy, has even released a free app that allows users to track gas prices by ZIP code. It’s even got a rewards card that links to your checking account.
Meanwhile, food and drink are up about 10 percent on average. And it’s not just Christmas dinner that’s suffering. Some retail chains have even noted that their lower-income customers are feeling the effects of inflation.
Luckily, there are plenty of apps available to help consumers stay on top of rising costs. Some retail companies are actively trying to keep prices down. Others are stepping up their rebate payments to residents.
Despite the high prices, some Americans are taking road trips over the holiday. According to a survey, 67% of adults said they would be willing to eat in a restaurant or cafe if they could get a good deal.
Although the cost of gasoline has fallen since it hit an all-time high in June, it’s still at a record high. The average price of a gallon of regular unleaded in California is almost $5.
Millennials ready to get back to the sport of shopping
The National Retail Federation predicts that more than 123 million people will shop in stores and online this holiday season. That is an increase of 10% from last year.
In addition, millennials plan to spend the same amount on holiday shopping as they did last year. They’re also planning to spend more than their baby boomer counterparts. For example, a typical millennial couple with two kids under 18 plans to spend $1,178.
Unlike older generations, millennials are not concerned with price hikes. In fact, they’re willing to go into debt to buy gifts. They’re more focused on the experience than on the material.
Despite their penchant for buying things they can’t afford, a majority of millennials say they’re excited about the holiday season. That’s compared to one-quarter of Gen Xers and just over a third of Boomers.
Almost half of millennials will use a debit card to purchase gifts. They’ll also use a credit card for an average of 38% of their purchases.
Several of these consumers plan to shop for gifts at mass merchants like Target or Kohl’s. Another group will shop at online e-tailers such as Amazon.
More than three-fourths of shoppers will use social media to find deals. They will also use mobile apps to keep up with brand updates.
Consumers are expected to start shopping earlier. They will also be more likely to buy gifts in person than online. However, these factors do not fully account for millennials’ shopping behavior.
Millennials do not respond to marketing campaigns the same way as Gen Xers and Boomers. They’re more likely to be interested in buying a ‘digital twin’ of a physical item than they are in a gift.
Forecasts for 2022
If you’re planning to do some Christmas shopping in 2022, then you’ll need to keep a close eye on inflation. Inflation is a concern for more than half of Americans, according to a recent survey.
Last year, the holiday shopping season began in mid-December, but there are reports that some consumers are already starting to shop early this year. Some shoppers are also planning to shop online.
Retailers are gearing up for this holiday season, but they need to make sure they’re ready for the competitive environment. Some of the challenges retailers face include inventory and inventory management issues, as well as supply chain concerns.
The National Retail Federation is predicting a modest 6% to 8% increase in holiday sales for the coming year. These projections are lower than the 7% to 8% expected in 2017.
However, there’s some good news: the holiday shopping season has not been completely disrupted by the recent COVID-19 outbreak. There is still a strong pent-up demand for holiday purchases, and it may linger into next year.
One of the biggest categories for holiday sales growth is apparel. This is driven by luxury brands, which will continue to be popular among affluent shoppers.
Health and beauty are also expected to see strong growth. However, pent-up demand from the pandemic could have to be tempered by current economic pressures.
Another concern for retailers is the cost of living crisis. Rising interest rates and inflation are putting a dent in consumer wallets, and it’s not easy to stay within a budget.
In addition to the economic challenges, some retailers have struggled to adapt to a changing consumer landscape. In fact, the recent rise of ecommerce has impacted the traditional retail sector, and retailers must be prepared to reposition their brands.