As winter holidays loom, retailers prepare for cautious holiday spending
As winter holidays loom, retailers prepare for cautious holiday spending
A number of big retailers will be reporting earnings this week, including Walmart, Target, Lowe’s, Gap and T.J. Maxx. Their earnings calls will likely give us a preview of what’s expected as we inch closer to Black Friday and the rest of the holiday shopping season.
Stores have already put up decorations, they’re blasting holiday music, and although it isn’t Thanksgiving yet, many retailers are offering Black Friday discounts early.
“Especially last week, we started getting more 50% off sitewide, 60% off,” said Jessica Ramirez, an analyst at Jane Hali and Associates.
She said usually you’d only see deals like 20% or 30% off right now. The deeper discounts could mean retailers are a bit anxious. Deals are especially good if you’re in the market for a winter coat.
“Weather right now, it’s warm. So outerwear, I’m concerned about,” she said.
Home furnishings isn’t expected to be a strong category either since not many people are buying homes. But as usual, tech will be popular. Same with beauty, an affordable luxury for all ages.
Katherine Cullen at the National Retail Federation said this mix shows how people are budgeting.
“They’re thinking about pulling back in other areas, maybe pulling back in dining out. They may be using some options like buy now, pay later,” she said.
All in all though, this year, Cullen expects holiday spending to increase 2.5% to 3.5%. It’s a lot less than the nearly 12.5% increase we saw in 2021. But it is closer to what we saw in 2019.
“I don’t know if I would specifically say we’re back to 2019, but I feel like in a lot of ways when I look high level, we are back to all the same trends that we discussed before the pandemic,” said Mari Shor, an analyst at Columbia Threadneedle Investments.
In other words, a consumer who’s careful with their wallet but is willing to open it up.
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