Expectations for the 2022 holiday shopping season
Retailers’ full attention is now on the holiday shopping season.
They’re hoping shoppers will spend big money this year, but there are factors that could dash those hopes.
This week, contributor Eileen Dallabrida previews what retailers and shoppers can expect from the holiday shopping frenzy.
Retailers are hoping for tidings of comfort and joy this holiday season, even as persistent inflation chills consumer confidence.
Market watchers predict this season won’t be quite as jolly as last year for merchants, when sales soared nearly 14% to a record-shattering $942.6 billion, according to the National Retail Federation, a Washington, D.C.-based trade group. This year, the NRF forecast sales between $942.6 billion and $960.4 billion. Consumers plan to spend an average of $833 for gifts and holiday items such as decorations and food.
Deloitte predicts a decline of 5% overall in spending for gifts and other holiday purchases. However, Deloitte’s survey also includes expenditures on experiences, an increasingly popular category, with a 7% increase in spending on entertainment, restaurants, concert tickets and close-to-home travel. Factoring in experiences, Deloitte forecasts the typical consumer will spend $1,460, flat from last year.
Target’s outlook is frostier. The retail giant reported a 52% drop in third-quarter profits and a cheerless forecast for holiday sales.
"Consumers are feeling increasing levels of stress driven by persistently high inflation, rapidly rising interest rates and a sense of uncertainty about their economic prospects," CEO Brian Cornell said during the company's earnings call.
Among shoppers’ economic concerns: the highest mortgage interest rates in 20 years, and a 13% spike in credit card balances, the weightiest debt in two decades.
As consumers evaluate where to invest their disposable dollars, many remain committed to local independent businesses. Richard Bishop, a farmer in Smyrna, specializes in pasture-raised turkeys. Demand presses up prices during the holidays. He’s already nearly sold out of Thanksgiving birds, priced at $6 a pound, with an $8 processing fee, more than three times the cost of a supermarket bird. He will have a second wave of turkeys ready in time for Christmas, when he expects another flock of customers.
“People like to serve turkeys that were raised here in Delaware, running around and eating bugs instead of being penned up and eating processed feed,” he says.
Tim Rodden of Newark will bestow family and friends with gifts of food and drink. He will shop local stores, Swigg in North Wilmington for wines and spirits, and Harvest Market in Hockessin for ingredients. The cookies will be even more local, hot from the oven in his kitchen at home.
“I’ll be baking a few varieties of biscotti—one chocolate for sure—and pairing with a bottle of Madeira as gifts,” he says.
Iris Prader of Lewes let her fingers do the walking, clicking online to buy Christmas and Hannukah toys for her four grandchildren. As she sees it, there’s only one downside to shopping remotely.
“Now all the boxes have arrived and I have no clue as to which child gets which gift,” she says. “I’ll have to FaceTime with my daughter to get clarity.”
The NRF’s holiday survey found 57% of consumers plan to shop online, a tick up from 56% last year. While there will be abundant offers for free shipping, many returns will be on the customer’s dime, with shoppers paying to mail returns.
That crackdown on return policies also will pertain to brick-and-mortar purchases, with most retailers mandating that returns be completed within 30 days to minimize losses.
Retailers expected 17.8% — an estimated $158 billion — of goods sold during the 2021 holiday shopping season to be returned, according to the NRF. It’s an expensive proposition for merchants, who might not be able to resell the merchandise for a profit. Returns also are a conduit for ill-gotten goods. Retailers lose $10.30 to shoplifting and other fraud for every $100 in returned merchandise accepted.
Here are other trends of the season:
- Retailers will close on Thanksgiving Day, abandoning the strategy of running door-buster sales on the holiday. Most supermarkets, drug stores and dollar stores will be open.
- Consumers are willing to shell out more greenbacks for green products, with 40% open to paying extra for eco-conscious products, according to a Shopify survey; 43% are more willing to buy from brands with sustainability practices like carbon-neutral shipping or low-waste operations.
- Shoppers are trimming their lists, from an average of 16 gifts to nine. Spending on pets is down 28%, wellness and home purchases are off 19%, and electronics and clothing/accessories are down 14% each, according to Deloitte.
- Toymakers are thinking smaller. LOL Surprise and Bratz dolls are introducing more than 200 new toys that are priced at or below $10. Last Yule, the companies introduced less than 15 new toys that cost less than $10.
Gift cards grow in popularity each year, especially cards that allow the recipients to enjoy an experience, such as dinner out or a massage. At Dr. Christopher Saunders’ Rejuvenate Med Spa in North Wilmington, a Black Friday gift card special will allow patrons to take 20% off the cost of services, says esthetician Lauren Hudson.
“They were a huge hit last year and we expect they will be again,” she says.
With energy prices spiking, gas cards are expected to be a coveted stocking stuffer this year.
Some stores will expand hours for holiday shopping, but not by much. Starting Dec. 9, Christiana Mall will be open an extra hour, closing at 9 p.m. on weekends and Saturdays and 7 p.m. on Sundays. On Black Friday, the mall will open an hour early at 9 a.m.
“We’ve found the early morning and late night shopping have not been productive, so we’ve concentrated our efforts on a convenient schedule that fits most shoppers’ agendas,” says Steve Chambliss, general manager. “Many stores also are offering curbside pickup or ship-to-home options.”
At Concord Mall, the doors will open at 5 a.m. to accommodate Bath & Body Work’s annual Black Friday blowout sale. The rest of the mall will open at 7 a.m., says Tom Dahkle, Concord’s general manager.
“I suspect we’re going to do well this year, even with the economy. There’s pent up demand and we are going to see some really good sales on clothing,” he says.
Santa Claus has arrived at Center Court and a Selfie Museum opens Nov. 21, bringing the mall to 85% occupancy, more than twice the rate three years ago.
“This is the first time in a few years that Covid isn’t an imminent threat to holiday shopping,” Dahkle says, noting that the Catch, the mall’s recently added catering venue, is booked into January with parties and holiday gatherings.
With the worst of the pandemic in the rearview mirror, yoga pants and coffee makers are on the closeout shelves. Because so many folks binged on electronics during lockdown, expect fewer sales on big-ticket items like laptops and televisions.
Among the deals for bargain shoppers:
- It’s official. Microsoft is dropping the price of its Xbox Series S to $250. And it gets better. Digital games are up to 67% off.
- Costco is offering $300 back for every $2,000 spent. That sweetens the deal for folks buying tires, appliances and other expensive items.
- For the handyman on your list, Home Depot is offering a Rigid SubCompact Drill Kit for $100, $50 off.
- Walmart is slashing prices like a Ninja, marking down the Ninja Mega Blender with Food Processor from $329 to $185.
- It will cost less to keep your New Year’s resolution to get in shape. NordicTrack is discounting its stationary bike from $799 to $599.