2023 Holiday Shopping Sales to Near $1 Trillion
The 2023 Retail Holiday Shopping Season has officially begun.
Defined as the 61 calendar days in November and December, the Retail Holiday Shopping Season is truly the pillar of the American retail industry. Historically, this two-month shopping blitz is nearly 10 times larger than the industry’s second largest shopping event, the back-to-school season. This year, according to the National Retail Federation (NRF), American consumers are expected to spend a record-high $973.8 billion on gifts, decorations, candy and other seasonal items, up roughly 4% from 2022. On average, each holiday shopper will spend $875, slightly above the five-year average of $866.
For the seventeenth year in a row, the No. 1 gift will be gift cards. The NRF expects 55% of all U.S. shoppers will purchase at least one gift card this holiday season. The second most popular gift will be clothing and accessories (49%), followed by books and other media (28%), personal care products (25%) and electronics (23%).
For decades, Black Friday – the day after Thanksgiving – has traditionally served as the unofficial kick-off to the Retail Holiday Shopping Season. Retailers would start offering sizable discounts and promotions to entice shoppers into the holiday spirit. But over the past few years, consumers have been starting their holiday shopping earlier and earlier.
In 2020 and 2021, pandemic-related supply-chain issues forced consumers to start their holiday shopping much earlier to obtain the limited quantities of goods retailers had in stock. In 2022 and 2023, high inflation has forced consumers to spread out their holiday shopping budgets. According to the NRF, 39% of holiday shoppers plan to start their holiday shopping earlier this year than last year. In fact, 41% of consumers will actually start their holiday shopping in October or earlier. Conversely, just 9% of consumers will start their holiday shopping in December.
Inflation remains a significant challenge for many Americans. In its survey, the NRF notes that 32% of shoppers state they will be cutting back on other personal and household spending to cover the added costs of holiday shopping. 62% state that sales and promotions will be their primary consideration when buying gifts. 30% will buy fewer gifts for others while 27% will buy less for themselves.
In response, retailers will be offering larger discounts this year to inflation-weary consumers. Industry experts project that toys, electronics and apparel will see the largest discounts. Retailers will also be offering those discounts earlier than in years past. If retailers wait until Black Friday to start enticing shoppers, they risk facing consumers who have finished their holiday shopping or who have already maxed out their holiday spending budget.
This year, consumers will once again rely heavily on online shopping. According to Adobe Analytics, online sales this year will total $221.8 billion, up 4.8% from 2022. For the first time ever, shopping on mobile devices (smartphones and tablet computers) are expected to drive more than half (51.2%) of all online shopping sales.
According to the NRF, online shopping will be the No. 1 shopping destination. 58% of all holiday shoppers will shop online this year, up from 56% in 2022. Rounding out the Top 3 holiday shopping destinations are department stores (49%) and discount stores (48%).
Despite high inflation and rising interest rates, so far this year, the American consumer has remained quite resilient. Whether that resiliency carries over to the holiday shopping season is yet to be determined. However, expectations are certainly high.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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