Guest Commentary: Economic uncertainty hasn’t stopped retail spending this year
Don BrunellDecember 15th, 2022
The good news is, despite higher prices, inflation, and safety concerns, more Christmas shoppers are browsing online and making in-store purchases.
The National Retail Federation reported this year an estimated 166.3 million people visited stores from Thanksgiving Day through Cyber Monday—an increase of 8 million compared with last year. It is the highest estimate since NRF began tracking this data in 2017.
The good news extends to online sales. E-commerce retail revenues this year are projected to grow to $554 billion compared with $360 billion in 2019.
Black Friday continues to be the most popular in-store day with 114.9 million people shopping, followed by 63.9 million on Cyber Monday. Among those customers 67% say they expect to head to stores, up from 64% in 2021, NFR’s surveys showed.
The Seattle Times reports one major factor is shoppers’ declining fear of COVID-19. Zachary Warring, an equity analyst at CFRA Research, who focuses on consumer discretionary sales, adds, “I think people will return (to physical stores), because overall, people enjoy … the atmosphere of brick-and-mortar shopping. It’s almost entertainment.”
Bloomberg reports a key reason for the sales uptick is retailers offered promotions earlier than normal to reduce excess inventory. Business owners had stocked up to avoid supply-chain shortages. However, fully stocked shelves and stuffed warehouses come with higher costs. The current inflation rate is 7.75%, meaning an item that cost $1 a year ago is now $1.10.
That sales optimism is shared by the Washington Retail Association. Renée Sunde, WRA president, expects spending across our state to increase by as much as 8% this holiday shopping season.
But her optimism is tempered by increases in crime and theft.
Sunde told the Thurston County Chamber of Commerce: “Communities across the state are facing a staggering increase in theft and crime with growing concerns over safety at a time when the retail industry continues to recover from the impacts of the pandemic, the highest inflation in 40 years, retail workforce shortages, and supply-chain challenges.”
One in four small businesses are reporting that they had to raise prices as a result of theft within their stores, and in some cases, organized retail crime is even creating product shortages, Sunde adds. “The threat to personal safety is also impacting the mental well-being of a lot of employees. They felt threatened. What this is resulting in is employees that are afraid to come to work.”
Bloomberg’s Olivia Rockeman writes, “Early shoppers helped companies such as Macy’s avoid the worst-case scenario in the third quarter, loading up credit cards to absorb higher prices for food and household items while taking advantage of steep discounts for overstocked TVs and furniture.”
Bloomberg reports more than three-quarters of customers expect to shop as much as or more than in 2021. However, some consumers are relying more on credit and buy-now, pay-later options than they did a year ago. That is causing a drop in the savings rate.
As we face shaky economic times, that trend could be a huge problem in 2023.
Don C. Brunell is a business analyst, writer, and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.