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The Weird Economy (Lance Turner Editor’s Note)

2 min read

What can we expect for the upcoming holiday shopping season?

Individual retailers in different sectors will have their own sense of where things are headed, but zoom out for a national perspective, and the mood is more somber than last year or the year before, and that’s giving some small-business owners anxiety about the season.

The 30,000-foot view from the National Federation of Retailers is that holiday sales will grow by 3% to 4% from November to December, landing somewhere between $957.3 billion and $966.6 billion. That would be in line with the average annual holiday increase of 3.6%, which retailers reported from 2010 to pre-pandemic 2019.

But comps are important in retail, and merchandisers are up against some big ones this year. In 2022, retail sales rose by 5.4%. And in 2021, sales skyrocketed 12.7% in the two-month period.

So why the slowdown this year? Some of it has to do with the stimulus Americans received during the pandemic, which helped fuel spending in 2020, 2021 and 2022. That stimulus is now gone, and shoppers are returning to pre-pandemic habits, the federation says.

But there are also hints of a general “economic uncertainty” among consumers. An AP-NORC poll recently found that many Americans are concerned about their financial future.

Debt might play a role. The Federal Reserve Bank of New York said last week that Americans now owe more than $1.08 trillion in credit card debt, a total that includes a $154 billion year-over-year increase — the biggest since 1999. That same report showed credit card delinquency also rising.

Still, the NRF has described consumers as “resilient,” and it’s hard to argue with that. For the most part, they’ve continued to spend through high gasoline prices, inflation and higher interest rates. But there’s a sense that that resilience could be on the wane, and that’s priced into the federation’s more average forecast.

Where does that leave retailers and small businesses? Max Rhodes, CEO of online wholesale marketplace Faire, summed it up to The Associated Press: “The combination of higher inflation and rising interest rates are making consumers nervous which in turn makes retailers nervous. It continues to be a weird economy. The data looks good, but nobody feels good about it.”

What to do? A report last week from McKinsey & Co. suggested that retailers start earlier with holiday promotions because consumers are already on the hunt. The report said 50% of the consumers it surveyed began their holiday shopping in “October or earlier.” “As early as September, retailers started promoting holiday ads on social media, with many more following in October,” the report said, adding that this year’s shopping season will be longer than the last.

And retailers will need to prioritize better prices and promotions, which remain the top consideration for consumers when shopping this year (66%) — and even higher than last year (59%). Of all the factors in this weird economy, that one is the least surprising.


Lance Turner is the editor of Arkansas Business.
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