Retailers across the country are gearing up for a tougher holiday shopping season compared to last year, when consumers opened their wallets as pandemic blocks eased. Deloitte estimates that sales will increase from 4% to 6% during the holiday season, compared to the 15.1% increase recorded in 2021.
In anticipation of slower sales growth, retailers plan to cater to consumers looking for more bargains and a longer purchase period so they don’t have to spend their entire vacation budget in a month.
“It’s not a disastrous holiday season, it’s a quieter holiday season than last year,” said retail analyst Neil Saunders. “Consumer demand hasn’t collapsed in a heap.”
Americans faced high inflation for much of 2022, spending more on food, fuel, and housing, and taking out discretionary items like travel and meals. Consumer prices rose 8.3% in August, despite the Federal Reserve’s rate hike campaign to crack down on inflation through higher interest rates.
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Last year, consumers spent their holiday money early in the season, mainly because they were concerned about supply chain disruptions which extended the shipping time and left some empty shelves and disappointed buyers. This year, analysts and retailers expect people to buy similarly at the start of the season, but now it’s because inflation has made it necessary for people to search for deals and budget more. carefully, rather than spending it all in the week or two before the peak holiday season.
The shift from pandemic concerns to inflation concerns is likely to affect hiring as well.
“A year ago, there was a lot of concern about covid, hiring and absenteeism,” said Michael Baker, senior retail analyst at DA Davidson. “I don’t think it’s a problem this year.”
This may be one of the reasons Walmart is taking a slower approach to hiring this year – the nation’s largest private employer said it plans to hire just 40,000 workers for the season, including seasonal store workers. , customer service employees and permanent truck drivers. Last year’s goal was 150,000 shop employees, albeit mostly with permanent roles.
Part of this year’s slower approach is likely due to Walmart hiring heavily in its warehouses last season and retaining employees throughout the year, Saunders said. Last fall, the Arkansas-based retailer it said it would add 20,000 workers for its distribution and fulfillment centers.
It is also probably an attempt to curb spending. Walmart warned in the summer that consumers were cutting back on discretionary items due to inflation and cut its profit forecast.
“They really want to try and cut costs so they can get a better result,” Saunders said.
Walmart spokesman Nick DeMoss said in a statement that “the company’s staff are stronger this holiday season than last year.”
“We know price is top of mind for Walmart customers and will continue to be a significant factor as the holiday season approaches,” he said. “Customers shop early and finding the lowest prices is a top priority.”
Target kept its hiring plans stable; the Minneapolis-based chain plans to hire up to 100,000 workers for the holiday shopping season, in line with last year’s plan but below its Seasons 2019 and 2020.
Some analysts expect consumers to go back to shopping in stores a little more than they did during the pandemic. FedEx sent a shockwave to Wall Street last week when it warned of weaker shipping demand.
“We’re seeing a lot of retailers telling couriers they don’t need last year’s capacity,” said John Haber, chief strategy officer at Transportation Insight, a supply chain consultancy. Haber attributes this to both people who shop in-store and people who cut down on discretionary spending.
Amazon hasn’t announced its hiring plans for this holiday season yet, but earlier this year it said it hired too many workers in its warehouses to keep up with the pandemic’s online shopping boom. When people began to emerge from the restrictions of the pandemic era and the absences of workers for covid have subsided, the e-commerce giant found itself with more workers than necessary. (Amazon founder Jeff Bezos owns the Washington Post.)
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Retailers, as well as employers in many industries, continue to struggle with a tight labor market where workers have more power than they have in years. Both Walmart and Target advertised competitive starting salaries and benefits for existing employees, including the fact that they would get their first fees on additional hours and scheduling flexibility.
Target said Thursday it will hold “business days” events from October 6 to October 8 and will extend its price match schedule from October 6 through Christmas Eve. Walmart said it would begin making returns in some stores in October, with the aim of making it easier for people to bring back gifts.