Accounting giant Deloitte says it expects a slowdown in holiday spending growth, forecasting in a new report that retail sales for November to January will only increase between 4% and 6% from a year earlier.
During last year’s festive season, overall retail sales rose by around 15%, helped by pent-up demand generated by the pandemic.
E-commerce sales are expected to continue outperforming this year, according to the report, with projected growth of 13% to 14% over the holiday period—up from last year’s online sales growth of 8.4%.
While the 2022 forecast is in line with pre-COVID growth rates in terms of dollar value, Deloitte said sales volumes would be reduced due to higher prices.
Thanks to soaring inflation, Deloitte analysts said consumers would scour stores and the web for the best deals, with many people expected to begin their holiday shopping early.
Toys, gift cards and apparel were expected to sell well this holiday season, while spending on leisure, travel and entertainment was forecast to increase.
“If there are fewer gift purchases by consumers, expect to see even more holiday promotions than ever,” analysts said in the report.
Earlier this week, KPMG also predicted a slowdown in holiday spending growth in 2022, with the firm’s own holiday sales report expecting an increase in the number of retailers being more promotional than they were last year.
According to a survey by market research firm Numerator, most consumers expect to spend between $25 and $50 on holiday purchases this year—but spending intention rises when talking specifically about Christmas, when the majority of consumers expect anticipate spending more than $200.
However, the poll showed that almost 90% of consumers believe inflation will impact their holiday shopping this year, with 60% expecting the effect to be moderate or significant.
Meanwhile, Salesforce said in July that it expected consumers to buy earlier than usual to avoid price hikes as inflation continues to eat into their spending power, with the firm predicting that half of all shoppers will switch brands this holiday season due to pricing.
“Pricing and discounting strategies will be more crucial than ever to holiday success,” Salesforce said in a blog post.
Last week, Bloomberg reported that merchants selling goods on Amazon were bracing for a “scary” holiday shopping season, with many expecting inflation to weigh on sales.
Many major U.S. retailers have already said they are planning a raft of promotions in a bid to entice shoppers to their stores with competitive discounts.
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