Retail holiday shopping season officially begins
The retail holiday shopping season is formally defined as the 61 calendar days in November and December. For the retail industry, it’s the granddaddy of all holiday shopping seasons. Over the next two months, caffeine and sugar-infused holiday shoppers will drop a near-trillion dollars into the coffers of wishful retailers across the nation.
On Thursday, the National Retail Federation (NRF) released its forecast for the 2022 holiday season. The NRF projects that sales will increase by 6%-8% over 2021 to between $942.6 billion and $960.4 billion. This equates to the average shopper spending roughly $833 on gifts and holiday-related items. In 2021, holiday sales reached $889.3 billion, a 13% increase from 2020.
Last season, the overarching theme was supply chain disruptions. Limited inventory and availability of many goods forced consumers to begin their shopping early or risk facing empty store shelves. In fact, a record 49% of all shoppers started their holiday shopping before November.
This year, the NRF contends, the theme will be inflation, which currently stands at 8.2%, near a 40-year high. Apprehension over high prices – and the impact to family budgets – is expected to push many Americans to begin their holiday shopping earlier than usual. According to the NRF, the No. 1 reason consumers cited for shopping early is to help them spread out the financial impact of holiday shopping on their budgets. Likewise, 44% of all shoppers think buying early is better because prices will rise even higher by year-end. 31% of all shoppers don’t anticipate the current holiday shopping deals to get much better as the season progresses.
For the sixteenth year in a row, the No. 1 most requested gift are gift cards. 54% of those surveyed said a gift card tops their holiday wish list. Rounding out the Top 5 most requested gifts are clothing or clothing accessories (49%), electronics (24%), home décor (23%) and jewelry (21%).
Once again, the No. 1 shopping destination is expected to be online. This season, 56% of consumers said they will conduct at least part of their holiday shopping online. This is slightly below the record high of 60% in 2020 due to the pandemic. Discount stores (48%) and department stores (47%) come in at No. 2 and No. 3, respectively. Online shopping is expected to increase 10%-12% this season to total between $262.8 billion and $267.6 billion.
On the labor front, employers are expected to hire 450,000-600,000 seasonal workers this holiday season. This is down from last season’s total of near-670,000.
The NRF admits that high inflation will impact consumers much differently based on household income. Households with income less than $75,000 will likely spend 7.5% less this season than last year. Conversely, households with income greater than $75,000 will likely spend 4.6% more this season. For households with income greater than $150,000, holiday spending this year is expected to increase by 21%.
What might surprise many is that given the financial pain of high inflation, sales this season are expected to rise by 6%-8% over last year. But remember, retail sales data are not adjusted for inflation. With the national inflation rate at 8.2%, this means that, on average, the same goods you bought last year will now cost you 8.2% more this year. Adjusting for inflation, this actually translates to a 0.2%-2.2% decrease in holiday sales from last year.
But whatever your spending habits might be, have a very safe, and fun, holiday shopping season.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
