The Great Pumpkin usually signals that the holiday shopping season is approaching. But retailers aren’t waiting to lure shoppers in this inflation-ridden holiday shopping season, when consumers have a choice of where to spend their dwindling discretionary cash.
The holiday shopping season, which begins with the hectic Black Friday the day after Thanksgiving and the Cyber Monday that follows, may be a distant memory.
Retailers have reacted to the new economic reality of falling retail sales from years past, where inflation is the worst in 40 years and consumer debt is at record highs. Consumers have learned that the longer they wait to buy their holiday gifts, the more the purchase value of their dollar will continue to be eroded by inflation. This makes gifts more expensive in December than in October. Taking inflation into account, today’s dollar is effectively worth 92 cents.
Holiday shoppers want to avoid ending up on empty shelves like they did in 2021 due to supply chain issues. Retailers, for their part, stocked up on inventory, expecting more than 50% of consumers who indicated in a Bankrate.com poll that they would start their holiday shopping season by Halloween. Hopefully they buy from physical stores that have oversized inventory to avoid supply chain issues. It could be risky if a report from Sensor Tower, a market intelligence company, is confirmed.
Sensor Tower reported that installs of major live shopping apps in the US increased by 77%, or more than 2.3 million between January and May 2022, compared to 2021. Combined with the growth in commerce mobile, holiday shoppers are expected to purchase more than $115 billion. from their mobile devices, a 20% increase from 2021. This is not good news for brick-and-mortar retailers without an online presence, where online sales of $209.7 billion in 2022 are forecast. between November 1 and December 31. That’s a paltry 2.5% increase from a year ago, when holiday 2021 online sales rose 8.6% from the pandemic-ridden 2020 holiday shopping season.
With retailers and small businesses counting on the holiday shopping season to monetize their 2022, much depends on how much shoppers need to spend, how much debt they’re willing to take on, and how resistant small businesses are to increasing prices to counter the impact of inflation on their costs.
As for small businesses, the National Federation of Independent Businesses reported a slight increase in their historically low optimism index. Additionally, 51% of their members would raise prices and a third said they would raise prices in the next three months. Another 30% said inflation was their top concern.
For their part, buyers are beginning to strain their financial resources. Due to rising prices, the second quarter of 2022 saw an increase of 233 million new credit card accounts, an increase of 13% and the highest since 2008. Additionally, credit card balances increased rose 5.5% to $46 billion, the most in 20 years. . As for 2022 long-term credit card debtors, 60% have been in credit card debt for one year, an increase from 50% in 2021 with 40% in debt over two years, from 32%.
Long Islanders, many for the first time, have long struggled with a pre-recession economy. Perfect timing for the Great Pumpkin.
Martin Cantor is director of the Long Island Center for Socio-Economic Policy and former economic development commissioner for Suffolk County. He can be contacted at [email protected]