The rise in prices could mar the 2022 Christmas shopping season as consumers count pennies and save on gifts wherever possible.
Since 2013 — except for a Covid hiatus last year — I have made five annual predictions about the coming holiday shopping season and how it could impact retail and ecommerce. My prognostication usually comes in September after I’ve considered back-to-school sales and peeked at how Halloween retail sales are shaping up.
This year, I am making my predictions early, as the current downward economic trends could prompt ecommerce owners and managers to plan early.
1. U.S. Retail Sales Will Grow Less Than Inflation
Thus far in 2022, inflation in America is the worst in more than 40 years.
In 1981, the annual U.S. inflation rate was 10.3%, according to data from the U.S. Bureau of Labor Statistics — the 12-month percentage change for all consumer goods based on city averages.
From 1981 to 2021, the BLS only reported eight years when inflation rose more than 4%: 1981, 1982, 1984, 1988-91, and 2021 when it rose 4.7%. That last 30-year stretch between 1991 and 2021 rarely saw inflation rise more than 2.5% annually.
Year-over-year inflation for 2022 to date is averaging more than 8%. For May 2022, it was 8.6% in total — 10.1% for food, 34.6% for energy, and 6% for all other items, according to the BLS.
This Christmas season, I predict overall retail sales in the U.S. will grow about 3.5% to roughly $1.3 billion. This will be less than the annual U.S. inflation rate, which might end up as high as 10%.
2. Inflation Tops 6% Worldwide by Christmas
Inflation will impact retail sales globally.
In June 2022, the Pew Research Center looked at inflation rates for 44 nations with “advanced economies.” For 37 of those nations, “the average annual inflation rate in the first quarter of this year was at least twice what it was in the first quarter of 2020,” according to Pew.
In Isreal, inflation for the first quarter of 2022 was 25 times the rate for Q1 2020. In June 2022, Turkey had a 54.8% inflation rate.
I believe the global annual inflation rate will top 6% by December 25, putting downward pressure on retail sales.
3. Marketplace Sales Will Rise
Amazon and similar online marketplaces will grow faster than ecommerce sales in general during the 2022 Christmas shopping season.
This is bucking a trend. In 2021, marketplace sales slowed by some estimates, growing between 15% and 18%, depending on the source. This compared to upwards of 45% growth rates during the pandemic lockdowns.
For 2022 gift-giving, I predict inflation-induced thriftiness will encourage many shoppers to use Prime and other services to keep shipping costs down. Some will purchase many gifts at once from the same online seller or marketplace to, once again, reduce shipping expenses.
If overall ecommerce sales grow 15% during the peak season, marketplaces will increase about 17% compared to last year.
4. Holiday Purchases Will Come Early
We know that inflation will increase prices. Buying a gift for your loved one will be more expensive in December than in October.
This will encourage two trends.
First, if holiday consumers might start shopping even earlier this year, knowing that annualized prices are rising between 6% and 8% per month. June might be a good time to start buying Christmas gifts.
Second, this behavior means key Christmas shopping days such as Black Friday and Cyber Monday will likely generate a smaller share of total holiday retail sales.
5. Mobile Commerce Will Grow 20%
A report from Sensor Tower, a market intelligence provider, noted that “top U.S. live stream shopping apps grew installs 77% year-over-year to 2.3 million” in the first five months of 2022. And that does not count downloads of popular video apps such as TikTok with its many ecommerce features.
Add to this trend the growth in all sorts of mobile commerce, and I predict more holiday shoppers will buy gifts via their mobile devices.
Total U.S. ecommerce sales from mobile devices should hit $115 billion, a 20% increase over 2021..
via https://www.aiupnow.com
Armando Roggio, Khareem Sudlow
