Dust Off Your Pocketbooks, The Holiday Shopping Season is Here
The retail holiday shopping season is the 61 calendar days in November and December. Without question, it is indeed the grandaddy of all shopping seasons for the retail industry. According to the National Retail Federation (NRF), about 92% of Americans plan on celebrating the winter holidays, which include Christmas, Hanukkah and Kwanzaa. And yes, for fans of the TV sitcom Seinfeld, I guess you can include Festivus as well.
This year, the NRF expects American consumers to generate a record-high $984 billion in holiday sales, roughly 3% higher than last season’s total. On average, each shopper will spend $902 on gifts, decorations and holiday-related supplies. The bulk of that spending ($641) will be on gifts.
Retailers, however, have expressed a sense of cautious optimism. They understand the spending fatigue felt by many consumers after years of high inflation and soaring interest rates. The projected 3% rise in holiday sales would be the slowest growth rate since 2018 (1.8%). Holiday sales rose by 3.9% last year and by 4.7% in 2022.
For the eighteenth year in a row, the No. 1 gift shoppers will buy this holiday season is gift cards. 53% of shoppers will purchase at least one gift card. The second most popular gift (49%) will be clothing and accessories. Rounding out the Top 5 most popular gifts this season are books & media (28%), personal care or beauty items (25%) and electronics (22%).
Among the many other trends this season is the continued growth of online shopping. 57% of consumers are expected to do at least some of their holiday shopping online, once again making it the No. 1 shopping destination. Online shopping using mobile devices (smartphones and tablets) are also expected to drive more than half (53.2%) of all online shopping sales. This year, Adobe Analytics projects online holiday sales to reach a record-high $240.8 billion, up a hefty 8.4% from last year.
$40.6 billion of those online sales are expected to occur during Cyber Week – the five shopping days from Thanksgiving through Cyber Monday. The retail industry promotes Cyber Week to encourage consumers to shop online, with some of the largest discounts being offered on Cyber Monday.
Another interesting trend is the use of artificial intelligence (AI) by holiday shoppers, especially among younger consumers. According to Adobe Analytics, 40% of American shoppers will use AI to help them shop this holiday season. Consumers plan on using AI to find the best deals and to help them research specific items or brands. Roughly 60% of Gen Zers (born between 1997-2002) are expected to use AI this season. Comparatively, just 20% of Baby Boomers (1948-1964) plan on using AI as a shopping tool.
Finally, there is a continuing shift towards early shopping. For decades, Black Friday traditionally served as the unofficial kick-off to the holiday shopping season when retailers began offering their big discounts to entice holiday shoppers. But over the past few years, consumers have started their holiday shopping much earlier. The No. 1 reason, the NRF cites, has been the impact of high inflation.
59% of Americans say high inflation has forced them to spread out their holiday shopping budgets. Almost half (49%) say they started their holiday shopping in October or earlier. Just 15% of consumers will start their holiday shopping in December. Consequently, retailers have been offering their large discounts much earlier to meet this changing dynamic.
Whether you’re an avid online shopper or prefer the energy and excitement of a retail store, there should be plenty of discounts to be had. Have a fun, and safe, 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.
