Walmart announced that it will offer thousands more Rollbacks this holiday shopping period on the … [+]
The most recent interest rate hike may impact holiday shopping for both retailers and consumers. Theoretically, higher interest rates will slow down consumer spending, lessening the demand for goods and services. Weaker demand means greater supply and should lead to lower prices. This may directly impact retailers by motivating them to discount holiday goods earlier and to take deeper markdowns to ensure inventory is being sold. Consumers will be on the hunt early for holiday purchases, and they will be looking for reduced prices on products and wanting to budget holiday expenses over a longer period.
While the National Retail Federation (NRF) has not formally forecast holiday sales, Deloitte has projected holiday sales to climb between 4% to 6% over last year (November to January). Neither the NRF nor Deloitte includes October in the holiday sales forecast but over the past few years, October has become the lead month for the holiday selling season. Consumer early holiday purchasing will be prompted by the Fed’s increased interest rates, retailers’ early access sales and the possibility of a recession later in the year. The projected sales increase over last year, even at 6%, does not cover the consumer price index increase (over 8.3% through August). Consumers will be buying fewer gifts but spending more money.
The higher interest rates will more deeply impact consumers that are reliant on credit cards to make purchases (and don’t pay them off at the end of each month) or have secured a variable mortgage rate. Chirag Modi, corporate vice president of industry strategy of Blue Yonder, stated, “Holiday discounting will start sooner as a result of higher interest rates; historically, this has happened when the Fed raises rates.” Modi discussed how discounting will vary by industry and category, depending on the retailer’s inventory level. Modi stated, “Retailers sitting on inventory will have more incentive to discount as opposed to those that have less inventory.” He also acknowledged that households will feel the pressure, especially those consumers that have a variable interest mortgage rate.
Rising interest rates can lead to a recession resulting in workers losing jobs and income. With the uncertainty of the next few months, consumers will be more selective about holiday purchases and will start their holiday shopping early, as they did last year.
The other major factor that will influence disposable income for consumers in cold-weather areas is the price of crude oil. Home heating costs will be substantially higher than last year. Even as fuel prices have decreased over the past few months, year-over-year fuel sales are up 39% and home heating oil is expected to be 17% higher than last year.
Target Deal Days were announced by the company for early October along with the return of Bullseye’s … [+]
The major retailers will deliver great sales incentives as early as October. Target
Walmart, the U.S. largest retailer, has announced that it will offer thousands more Rollbacks this holiday shopping period, delivering deeper savings on the hottest categories including toys, home, electronics and beauty. The company also extended its return policy; eligible purchases made on or after October 1 can be returned through January 31, 2023, and the returns can be done curbside.
It is rumored that Amazon
Amazon’s streaming of Thursday Night Football includes giving Prime members access to official … [+]
Amazon can take advantage of its Thursday Night Football streaming event to highlight Prime benefits including special sales events. The first Thursday Night Football (TNF) stream averaged 13 million viewers according to Nielsen National TV Ratings, which is 47% higher than the NFL Network game during the same week the previous year. Amazon Prime Video will stream the NFL’s Thursday night games through 2033. Access to millions of viewers can drive incremental revenue in October with an added Prime sales event and its official TNF program for Prime Members.
The onset of holiday shopping as early as October will spread out revenue over three months for retailers. Consumers will be motivated to start shopping early to take advantage of retailer incentives and to spread out their holiday spending over October, November and December. The NRF has stated that U.S. consumers have been starting their holiday buying earlier than in years past, both to stretch out their budgets and to avoid, or at least mitigate, the stress of holiday shopping.
About Author
