The good news is, despite higher prices, inflation and safety concerns, more Christmas shoppers are browsing online as well as making in-store purchases.
The National Retail Federation (NRF) reported this year an estimated 166.3 million people visited stores from Thanksgiving Day through Cyber Monday — an increase of 8 million people from last year. It is the highest estimate since the federation began tracking this data in 2017.
The good news extends to online sales. E-commerce retail revenues this year are projected to grow to $554 billion compared to $360 billion in 2019, the first year of the pandemic.
Black Friday continues to be the most popular in-store day with 114.9 million shopping followed by 63.9 million on Cyber Monday. Among those customers, 67 percent said they expect to head to stores, up from 64 percent in 2021, the retail federation’s surveys showed.
The Seattle Times reported one major factor is shoppers’ declining fear of COVID-19. Zachary Warring, an equity analyst at CFRA Research who focuses on consumer discretionary sales, added: “I think people will return [to physical stores] because overall people enjoy … the atmosphere of brick-and-mortar shopping. It’s almost entertainment.”
Bloomberg reports a key reason for the uptick in sales is because retailers have offered promotions earlier than normal to reduce excess inventory. Business owners stocked up to avoid supply-chain shortages, but fully stocked shelves and stuffed warehouses come with higher costs. The current inflation rate is 7.75 percent, meaning an item that cost $1 a year ago is now $1.10.
That sales optimism is shared by the Washington Retail Association. Renée Sunde, WRA president, expects spending across our state to increase by as much as 8 percent this holiday shopping season. But her optimism is tempered by increases in crime and theft.
Sunde told the Thurston County Chamber of Commerce: “Communities across the state are facing a staggering increase in theft and crime with growing concerns over safety at a time when the retail industry continues to recover from the impacts of the pandemic, the highest inflation in 40 years, retail workforce shortages, and supply chain challenges.”
Sunde said 25 percent of small businesses report that they had to raise prices as a result of theft within their stores, and in some cases, organized retail crime (ORC) is even creating product shortages.
“The threat to personal safety is also impacting the mental well-being of a lot of employees,” Sunde added. “They felt threatened. What this is resulting in is employees that are afraid to come to work.”
Bloomberg’s Olivia Rockeman wrote “early shoppers helped companies such as Macy’s avoid the worst-case scenario in the third quarter, loading up credit cards to absorb higher prices for food and household items while taking advantage of steep discounts for overstocked TVs and furniture.”
We will likely see more holiday hiring, but with the trouble retailers and transportation companies are having attracting workers for normal business periods, it will be interesting to see how many workers these companies will be able to hire, Andrew Challenger, vice president of Challenger, Gray & Christmas, told RetailDive.com.
“The end of the expanded unemployment benefits may spur some workers to take these positions. However, myriad other issues could keep them from filling these roles, such as COVID concerns, vaccination statuses, childcare issues, and burnout,” Challenger said.
Bloomberg reports more than three-quarters of customers expect to shop as much as or more than in 2021. However, some consumers are relying more on credit and buy-now, pay-later options than they did a year ago. That is causing a drop-off in the savings rate.
As we face shaky economic times, that trend could be a huge problem in 2023.
Don C. Brunell is a business analyst, writer and columnist. He is a former president of the Association of Washington Business, the state’s oldest and largest business organization, and lives in Vancouver. Contact firstname.lastname@example.org.