Retailers hope economic grinches don’t hamper the holiday shopping season
With Thanksgiving nearly here, retailers’ full attention moves to holiday shopping.
They’re hoping people are ready to open their wallets to spend big this year, but a variety of factors could temper how many gifts land under the tree.
Contributor Eileen Dallabrida details what retailers and shoppers can expect from the holiday shopping season.
This year, Santa’s sled must navigate inflation, renewed student loan payments, concerns about two foreign wars, and the highest interest rates in 20 years on its way to deliver holiday cheer.
Still, retail watchers expect modest growth, with the National Retail Federation predicting holiday spending will inch up 3-4% to between $957.3 billion and $966.6 billion. That’s the slowest pace in five years. Last year, holiday sales growth was 5.4%, according to the NRF.
“Our sense is that the cumulative effect of all of these things is going to show some moderation in consumer behavior relative to the last several years of holiday spending,” NRF CEO Matthew Shay said on a media call. “That is something that is predictable and ultimately unescapable.”
Joyce Dawley of Middletown is planning to make a few gifts this year. She knits and crochets and recently has taken up weaving. Giving home-made gifts is a strategy that will be adopted by 25% of consumers this Yule, according to a Forbes survey. The survey also says:
- More than half (51%) of shoppers will buy fewer gifts per person this year to cope with higher prices caused by inflation.
- Shoppers are leery about high interest rates. Less than half (42%) will put purchases on credit cards; 33% will pay off their plastic in full to avoid paying interest.
- A minority of consumers (15%) opened a new credit card account in anticipation of holiday shopping; 64% of those accounts offer rewards, cash back or a welcome bonus.
- Most consumers (74%) will buy traditional gifts, such as apparel, jewelry, sporting goods and electronics; 21% will bestow experiences, such as travel, spa treatments, and restaurant gift cards.
Spurred by Cyber Monday, Amazon Prime Days and other promotions, online sales are expected to rise 4.8% over last year to $221.8 billion. Amazon hired 250,000 seasonal workers nationwide to keep up with deliveries. Still, 85% of consumers will do some shopping at brick-and-mortar stores.
“We will be super busy, but Black Friday isn’t overwhelming anymore.”Steve Chambliss, general manager of Christiana Mall
Christiana Mall is at 100% occupancy with merchants who hope to cash in on holiday spending, including newcomers Kendra Scott, a personalized gift and jewelry boutique, Janie and Jack, a stylish children’s store, and TAG Heuer, a purveyor of luxury timepieces. That includes more than 60 pop-up carts and kiosks selling such goods as scented candles and locally made crafts, says Steve Chambliss, the mall’s general manager.
Thanks to Delaware’s tax-free status, Christiana is a magnet for out-of-state shoppers from Maryland, New Jersey, and Pennsylvania. About half the mall’s visitors hail from neighboring states.
“Personal care and cosmetics are really strong and our restaurants are having a great year,” he says. “Inventory is a non-issue. There aren’t outages like there were a couple years ago.”
Last year, the mall and other retail centers were short-staffed in a tight labor market. Chambliss says most merchants have been able to fill the ranks this season through such strategies and enhanced wages and flexible schedules.
Santa arrived at the mall on Nov. 10 and carols began playing while calls of “trick or treat!” still vibrated in the air. “Halloween comes down and Christmas goes up,” Chambliss says.
The official launch to the season has become blurred in recent years. The trend of opening on Thanksgiving Day is now a turkey. Black Friday—so named because it’s traditionally the day retailers can expect to be in the black for the year—is still a prime shopping day, with lots of doorbusters. The mall will open two hours early, at 8 a.m.
“We will be super busy, but Black Friday isn’t overwhelming anymore,” Chambliss says.
In seasons past, shopping centers have greatly expanded their hours throughout the holidays, opening as early as 6 a.m. and staying open as late as midnight. Christiana’s hours will be 10 a.m.-8 p.m. through Dec. 7, and 10 a.m.-9 p.m. through Dec. 23.
“Those fringe hours weren’t productive, so we decided to cut back on them,” he says.
Throughout the area, major stores—Macy’s, Target and Walmart among them—will open at 6 a.m. Cabela’s, the sporting goods giant, will start fishing for customers at 5 a.m., along with Kohl’s. Concord Mall in North Wilmington will be open 6 a.m.-9 p.m.
Many shoppers aren’t waiting for Black Friday. This year, half of consumers made purchases by Halloween, according to a Bankrate survey. A report by RetailMeNot says 64% of consumers started buying in October, up from 53% in 2022.
Karen Lee of Wilmington has nearly wrapped up her gift list, picking up items during a trip to Europe. “I start in the summer and mostly shop high-end craft shows and museum stores,” she says. “I like one-of-a-kind crafted items.”
Amid the joy of the season, there are a few grinches lurking. Wars rage in Ukraine and the Gaza Strip. A federal program suspending student loans expired in October, meaning 40 million consumers are back to paying an average $350 a month on education debt. One in four—26%--plans to cut holiday spending in order to make payments. Target reported to investors that consumers are cutting back on such basics as groceries. Credit card delinquencies are up.
The annual AlixPartners Holiday Outlook Survey found that 26% of consumers plan on spending less this holiday season than last year. Lower-income households are cutting back the most, with 38% of households with incomes under $45,000 tightening their belts.
Nearly three-quarters (72%) of consumers are steeled for higher prices due to inflation. Coping strategies include:
- Buying fewer gifts. An average of eight presents will be under the tree compared to nine gifts in 2022.
- Spending more on gift cards, $300 versus $217 in 2022. Consumers reason that although a sweater that cost $100 in 2021 might cost $120 in 2023, a $100 gift card still costs the same.
- Looking for deals. Two-thirds will shop on Black Friday and/or Cyber Monday versus, compared to 49% in 2022.
Among the Black Friday doorbusters: at Target, a Barbie Vacation House Playset is $69, marked down from $115; at Walmart, Roku Premier 4K/HDR Streaming is $19, discounted from $35; and at Best Buy, a Microsoft Surface Pro 9 with 13-inch touch screen is $1,000, discounted $540.
At the NRF, analysts anticipate that deep discounts and a strong job market will inspire shoppers to shore up their confidence and open their wallets.
“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said in a statement. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”