In the wake of a pandemic-fueled e-commerce frenzy, U.S. retailers anticipate the 2022 holiday shopping season will yield the smallest year-over-year increase in online sales since at least 2015, but that could also mean deeper discounts for budget-conscious consumers.
According to a forecast compiled by Adobe Analytics, online sales from Nov. 1 through Dec. 31 are expected to increase only about 2.5% to $209 billion, compared with an 8.6% increase one year ago, Reuters reported.
The forecast, Barron’s reported, is based on more than 1 trillion shopper visits to U.S. retail sites, including 85% of the top 100 U.S. online sellers, as well as a mid-September survey of more than 1,000 consumers.
According to CNBC, an inventory glut is largely to blame for the pessimistic 2022 holiday outlook, as retailers scrambled to unsuccessfully offload excess inventory through months of aggressive sales and markdowns ahead of the traditionally hectic holiday shopping season.
In addition, financial constraints have forced many shoppers to recalibrate their holiday shopping budgets, forcing some to shop months ahead of schedule to spread out payments amid a financial crunch.
“The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week,” Patrick Brown, vice president of growth marketing and insights at Adobe, told CNBC.
According to the forecast, online sales on Black Friday are expected to increase just 1% from a year ago, while Cyber Monday revenue is expected to grow by only 5.1%. Meanwhile, a survey from KPMG found that 85% of holiday shoppers in 2022 are concerned about inflation, and that 34% will opt for cheaper gift categories, the network reported.
“Consumers will be looking for promotions this holiday season, and retailers should be looking to respond by having desirable gifts for the budget-conscious consumer,” Matt Kramer, head of KPMG’s consumer and retail sector, told CNBC.
Brown also told Barron’s that the shift to earlier shopping may necessitate adjusting the parameters for future holiday spending forecasts to include October sales projections, noting that consumers have spent $590 billion online year-to-date, or roughly 9% more than had been spent online by this point in 2021.
Deep discounts later in the season may become retailers’ only strategy for clearing inventory as shopping lists shrink and bargain hunters waffle on big-ticket items, Barron’s reported.
As per the Adobe forecast:
- A 27% average discount is expected on electronics in 2022, or about 8 percentage points more than thrifty shoppers saw in 2021.
- Toys are expected to be discounted an average of 22%, compared with only 19% in 2021.
- Appliances are expected to be discounted an average of 18%, compared with only 4% in 2021.
©2022 Cox Media Group