Retailers gearing up for the holiday season are worried about a spending slowdown despite initial resilience shown by shoppers, as they face increased financial pressure from reduced savings, rising credit card debt, and persistent inflation.
Financial Pressure on Consumers
Retailers are concerned about a potential slowdown in holiday sales as consumers face increased financial pressure. Despite a strong job market and steady wage growth, shoppers have started to cut back on spending, ending six consecutive months of gains. Factors contributing to this include dwindling savings, higher credit card debt, and persistent inflation in goods and services.
Impact on Retailers
Major retailers such as Walmart, Best Buy, and Target have already reported a weakening consumer trend, leading to a cautious outlook for holiday sales. Luxury retailers, including Saks Fifth Avenue, are also noting a softening in consumer spending.
Holiday Sales Forecast
The National Retail Federation expects a slower pace of holiday spending compared to last year, predicting a 3% to 4% increase in sales for November through December, down from 5.4% growth the previous year. The forecast reflects the economic uncertainty and a return to the average annual holiday increase of 3.6% seen before the pandemic.
Shift in Shopping Behavior
Retailers are adjusting their strategies to accommodate changing consumer behavior, including earlier holiday sales and a focus on deals to attract shoppers. Many are also anticipating a last-minute shopping trend, with increased emphasis on value and discounts.
Consumer Behavior and Online Discounts
Consumers like 85-year-old Barbara Lindquist are planning to spend cautiously, focusing on deals and value as they navigate high prices on essential items. Online discounts are expected to be better than the previous year, particularly for toys, electronics, and clothing.
Anticipated Busy Shopping Periods
The Black Friday weekend, including Cyber Monday, is anticipated to be a key barometer of shoppers’ willingness to spend, with Black Friday expected to be the busiest shopping day of the year. Retailers have already been offering Black Friday-type deals throughout the month to drive sales.
Retail experts like Marshal Cohen believe that consumers will be more selective in their purchases, sticking to lists and avoiding impulse buying. There is a lack of urgency among consumers, with many planning to shop at their own convenience throughout the season.