Labor shortages and supply chain issues may be driving up prices on consumer goods and could lead to some must-have gifts becoming difficult or impossible to get a hold of, but market watchers predict U.S. shoppers will fight through the challenges and still spend at record levels in the upcoming holiday shopping season.
The National Federation of Retailers said overall holiday shopping in November and December will grow between 8.5% and 10.5% over 2020 to between $843.4 billion and $859 billion. The numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with a previous high of 8.2% in 2020 to $777.3 billion and an average increase of 4.4% over the past five years.
Federation President/CEO Matthew Shay said the current positive household financial health of many Americans will drive a record season for U.S. retailers.
“There is considerable momentum heading into the holiday shopping season,” Shay said in a report released late last month. “Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger.
“Retailers are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this time of exceptional consumer demand.”
National Retail Federation Chief Economist Jack Kleinhenz said the vigorous consumer spending that’s characterized most of 2021 is likely to continue through the holiday season.
“Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure,” Kleinhenz said in the federation’s holiday report. “With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season.
“However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”
Those opting to knock off their holiday shopping via online retailers will help drive holiday e-commerce sales north of $200 billion for the first time, according to the annual holiday sales preview released last week by Adobe Analytics.
Adobe analysts predict this year’s Black Friday and Cyber Monday online sales will be up 5% to $9.5 billion and 4% to $11.3 billion, respectively, blowing past last year’s record-breaking sales figures. Thanksgiving Day should see about $5.4 billion in sales with the whole of Cyber Weekend seeing $36 billion in sales, accounting for 17% of the online holiday shopping season.
U.S. shoppers are also set to spend more time than ever perusing their online holiday purchase options this time around.
The Adobe report estimates individuals will spend an average of 12 hours online shopping in November and December. Cumulatively, that comes out to 36.8 billion hours or 414,000 years of shopping over the two month season.
Analysts also predict holiday mega-deals are likely to be much harder to come by this year as the lethal combination of inflation and supply chain challenges lead to lower availability in the face of record volumes of demand.
“Given the demand surges expected for the Q4 holiday season, we expect the deepest discounts to drop into the range of 5% to 25%, notably shallower than strongest discounts that fell to 10% to 30% across all online categories in previous years,” Adobe analysts wrote. “(And) as inflation has been on the rise throughout much of this year, prices have been left at more elevated levels, ramping into the holiday season.”
And, of course, everyone wants to know what will be hot in the upcoming holiday season. Here are the items Adobe experts believe will be climbing to the top of holiday shoppers’ gift lists this year:
- Tamagotchi Pix
- Pop Fidget
- Got2Glow Fairy Finder
- Baby Yoda
- Gabby’s Dollhouse
- Peek-A-Roo Panda
- Paw Patrol
- Itty Bitty Prettys Tea Party
- Nintendo Switch OLED
- Playstation 5
- Xbox Series S/X
- Steam Deck
- Metroid Dread
- Battlefield 2042
- Pokemon Brilliant
- Diamond/Shining Pearl
- Halo Infinite
- FIFA 22
- Far Cry 6
- Call of Duty Vanguard
Other hot holiday items
- Airpods and AirPods Max
- Smart mugs
- Instant Pot Air Fryers
- Smart water bottles
- Record players
- Samsung and LG TVs
- Weighted blankets