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Holiday Shopping In 2022: The State of Affairs

Halloween might not be here yet, but the “Holiday Creep” is more palpable than ever.

Walk into any store, and you’ll feel it: Massive Christmas trees line the aisles of Costco. Walmart displays “ugly” Christmas sweaters, advent calendars, and cookie decorating kits. When you might expect to see trick-or-treating goodies in Target’s famous “dollar section,” you’ll find garland, decorative reindeer, and mini trees instead. Holiday music will soon follow you throughout your shopping trip (if it hasn’t started to already).

If it feels like holiday displays are showing up in stores earlier every year, it’s because they are. And surprisingly, many big ticket holiday items are already on sale. Which may, or may not be, a good thing. 

2021: Supply Issues during COVID

Anticipated supply issues in last year’s holiday season created unique circumstances for not only anxious shoppers, but retailers, as well. In order to anticipate the current holiday shopping season, it helps to review the one in 2021.

After countless products sat on backorder in 2021, companies encouraged customers to plan their holiday shopping early.  Their promise was a strong one: Shop early to avoid shipping delays, secure the most popular items, and lose the drama of last-minute gift buying.

Retailers predicted that shoppers would rush into stores with their pre-planned holiday list and have no issue paying full price.

But in anticipation of delays, retailers overestimated consumer demand by a lot.  And now many of those items from 2021 are still sitting on shelves (or in storage) in 2022.

So, in an interesting twist, supply isn’t an issue right now, but demand might be.

Inventory Overload in 2022

As a result of anticipating a huge 2021 shopping demand, stores nationwide now sit on $548.8 billion in inventory as of July. Quite the opposite of what consumers expected last season.

Stores now maintain overflowing inventory of everything from holiday pajamas, to Christmas tree decorations, and last-year’s trendiest sweaters.

So, what does this mean for this year’s holiday shoppers? And for retailers?

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Expect to see large, early, and frequent sale

Rob Garf, VP and GM, Retail and the Chair of the Client Advisory Board for Retail at Salesforce, told RETHINK Retail that we should expect to see more discounts as retailers move to clear inventory and turn a profit. 

“2021 was about the first mile and getting products into the domestic supply chain,” said Garf.  “This year is all about profitability. It’s about figuring out how to manage all those costs. They’re not going to be able to absorb all of them—there are going to be heavier discounts this year.” 

As retailers struggle to clear shelving space for new items in 2023, they’ll implement heavy, recurring discounts much earlier in the season. 

Shoppers have already witnessed evidence of these mass sales as early as October of this year. Walmart’s holiday sales started October 1, and Target’s followed on October 6, promising “more flexibility, ease, and value” to its loyal shoppers.

Consumers are buying less 

Shopper hesitancy comes with good reason. With inflation at a 8.6% increase, the highest in 4 decades, American families could find themselves less likely to make holiday purchases, especially when gas, food, and housing remain at an all-time high. 

As a result, consumers are already appearing more reluctant to stretch their budget on non-essential gifts, instead buying less while focusing on higher-ticket items. 

At the same time, analysts with Salesforce predict that consumers will also be less loyal this holiday season as they search for the best deals.

“Consumers are going to buy less products at higher prices, and so there’s going to be a lot of competition, a lot of switching,” said Garf. “We see about half of consumers will try a new brand this holiday in the search of value.”

Implications for Retailers

According to Garf, while shoppers will enjoy heavily discounted seasonal items, inventory overload, rising labor and fuel costs, as well as reduced consumer loyalty will present challenges to retailers.

“It’s going to be a tough game to play in terms of preserving margins,” said Garf. 

The next two months will be telling for holiday shopping. Will shoppers still spend the same as years past? Are inflation-minded consumers resisting this year’s holiday creep—or are they simply buying fewer items to protect their already strained budget?

If there is one thing we can be certain of, retailers in 2023 will need to begin rethinking their holiday season strategies beyond big sales and early rollouts.