Retailers across the country are preparing for a tougher holiday shopping season Compared to last year, when consumers opened their wallets as the pandemic lockdown eased. Deloitte estimates that sales will increase 4% to 6% this holiday season, compared to the 15.1% increase recorded in 2021.
In anticipation of slowing sales growth, retailers are planning to cater to consumers looking for more deals and a longer shopping period so they don’t have to spend their entire holiday budget in one month.
It’s not a disastrous holiday season, it’s a quieter holiday season than last year,” said retail analyst Neil Saunders. “Consumer demand has not collapsed into a pile.”
Americans were dealing with high inflation for most of 2022, spending more on food, fuel and housing and falling back on discretionary items like travel and dining. Consumer prices jumped 8.3 percent in August, despite the Federal Reserve’s rate hike campaign to quell inflation by raising interest rates.
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Last year, consumers spent their holiday dollars earlier in the season, in large part because they were concerned about supply chain disruptions. This lengthened shipping times, left some shelves empty, and disappointed shoppers. This year, analysts and retailers are expecting people to similarly shop earlier in the season – but now the reason is that inflation has made it necessary for people to look for bargains and budget more. Carefully, rather than spending it entirely in the week or two leading up to the peak of the holiday season.
The swing from pandemic fears to inflation fears is also likely to affect employment.
“A year ago, there was a lot of concern about virus infection, hiring and absenteeism,” said Michael Baker, senior retail analyst at DA Davidson. “I don’t think that’s a problem this year.”
That may be part of the reason Walmart has taken a slower approach to hiring this year — the nation’s largest private employer said it plans to hire just 40,000 workers this season, including seasonal store workers, customer service staff and regular truck drivers. Last year’s target was 150,000 store workers, although most are in permanent positions.
Part of this year’s slower approach, Saunders said, is because Walmart employed heavily in its warehouses last season and retained employees throughout the year. Last fall, the Arkansas retailer It said it would add 20,000 workers to distribution and fulfillment centers.
It may also be an attempt to limit spending. Walmart warned in the summer that consumers are cutting discretionary items due to inflation, and are lowering their earnings expectations.
“They really want to try to control the gates on cost so they can make the end result look better,” Saunders said.
“The company’s staff is stronger this holiday season than it was last year,” Walmart spokesman Nick de Moss said in a statement.
“We know price is high on the minds of Walmart customers and will continue to be an important factor as the holiday season approaches,” he said. “Customers shop early, and finding the lowest prices is a top priority.”
Target has kept its staffing plans steady; The Minneapolis-based chain expects to hire up to 100,000 workers for the holiday shopping season, in line with last year’s plan but less than 2019 and 2020 seasons.
Some analysts expect consumers to return to store shopping a little more than they did during the pandemic. FedEx sent a shock wave across Wall Street last week when it warned of weak shipping demand.
“We’re seeing a lot of retailers telling package carriers they don’t need as much capacity as last year,” said John Haber, chief strategy officer for Transportation Insight, a supply chain consultancy. Haber attributes this to people who shop in the store as well as people who underestimate discretionary spending.
Amazon has not yet announced hiring plans for this holiday season, but it said earlier this year that it has hired too many workers in its warehouses to keep up with the online shopping boom. When people began to break out of the restrictions of the epidemic era The absence of workers due to the Corona virus has declined, and the e-commerce giant has 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 deal with a tight labor market where workers have more power than they have had for years. Walmart and Target have announced competitive starting wages and benefits for existing employees, including that they’ll get their first dibs on overtime and scheduling flexibility.
Target said Thursday that it will hold its “Deal Days” events October 6 through October 8, and will extend its pricing match program from October 6 through Christmas Eve. Walmart said it will start making curbside returns in some stores in October, with the goal of making it easier for people to return gifts.
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