Holiday spending expected to grow as discounts, flexible spending plans heat up
The Casselberry family juggles a lot in December. One of their sons celebrates a birthday, and the holiday season kicks into full gear.
Shopping at Walmart in Cranberry earlier this month, Josh and Riva Casselberry and their boys, Elliot, 4, and Sullivan, 2, took advantage of a break in their schedules to browse the holiday section.
“These guys want to get the tree together, and we’ve got some of the decorations out,” Josh Casselberry said.
With their hands full, Josh and Riva Casselberry of Hampton often opt to shop online for gifts, whether for Elliot’s birthday, Hanukkah or Christmas.
“Wherever there are sales,” Riva Casselberry said. “Whoever has the best price.”
Holiday spending traditionally kicks off Black Friday, despite sales having been advertised for close to a month. Spending this year is expected to grow compared to last year but at a slower pace, as consumers focus on their budgets amid inflation and higher interest rates, according to the National Retail Federation, the nation’s largest retail trade group.
NRF anticipates total holiday spending — in store and online — will grow between 3% and 4% over last year to between $957.3 billion and $966.6 billion. That growth is a little lower than last year, when sales jumped 5.3%, but it is consistent with the average annual holiday increase of 3.6% from 2010 to 2019, the group said.
“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” said Matthew Shay, NRF president and CEO. “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”
Consumer spending has remained resilient despite inflation, higher gas prices, stringent credit conditions and elevated interest rates, NRF chief economist Jack Kleinhenz said.
“We expect spending to continue through the end of the year on a range of items and experiences,” Kleinhenz said. “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.”
Increasingly, shoppers are going online to seek out the best deals. Online discounts are expected to hit record highs, as retailers try to lure consumers, according to Adobe Analytics, an analytics and measurement arm of the software company Adobe.
Adobe expects U.S. online holiday sales between Nov. 1 and Dec. 31 to hit $221.8 billion. That’s 4.8% growth over last year.
“Never-before-seen discounts and the increased usage of the Buy Now, Pay Later flexible spending method, which is expected to drive $17 billion in online spending, will drive spending this season as consumers look to stretch their budgets when making purchases,” Adobe Analytics found in its annual forecast. “Additionally, shopping on mobile devices is expected to hit a major milestone, surpassing desktop and driving over half (51.2%) of all online spending this season.”
Adobe Analytics expects discounts to peak at 35% off listed price for toys, 30% for electronics and 25% for apparel.
Cyber Week — the shopping period including Thanksgiving, Black Friday and Cyber Monday — is expected to account for $37.2 billion in online spending, up 5.4% year-over-year and representing 16.8% of the holiday season.
For New Kensington shoe store Deadstock & Dandies on Fifth Avenue, the holidays mean an expansion.
Owner Denzel Carter opened a new brand, 412 Toe, inside Monroeville Mall in September, and another is set to open at Tanger Outlets in Washington on Black Friday.
This year, he’s expecting interest in the Nike Panda Dunks and Air Jordan shoes. He also sees a lot of demand for locally branded clothes.
“I want to definitely give my customers a shoutout for that because a lot more are buying local branded clothes, and that’s good for local businesses,” Carter said.
Still, a lot of shoppers are stressed about their budgets.
“A third of holiday shoppers expect inflation to impact their buying habits, and 25% are stressed about the cost of holiday shopping,” said Ted Rossman, senior industry analyst for Bankrate. “Consumers are going to be frugal this holiday season.
“For instance, 87% told us they’re looking for ways to save money, led by purchasing fewer items and seeking more coupons, discounts and sales.”
Dan Reed, manager at Walmart in Cranberry, said merchandise arrived steadily in preparation for Black Friday.
“That’s not only for our in-store customers but our online customers as well,” Reed said.
As Black Friday sales campaigns have crept earlier and earlier, retailers have found that consumers have followed.
“We’ve seen a really great response,” Reed said. “A few years ago, we first started the hybrid option where we have both the in-store, traditional event and the online event, and we’ve tweaked a few things over the years and tried to simplify it for both our associates and customers. Some people prefer the online method. Some people prefer the in-store method, and some people prefer both. It’s a way for us to take care of all the different kinds of customers we have.”
Tracy Alaia this week has been doing some final buying for her store, Feathers Artist Market and Gifts in Irwin. The gift shop specializes in locally made items as well as events like a book club and painting classes.
Alaia likes to include free, small gifts with purchases as well as unique bags and tissue paper.
“All the little details that make things special when you shop at a small boutique,” Alaia said. “You get a ready-made present.”
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