October holiday deals will upend the season as growth slows from 2021, forecast shows.
A new forecast for online holiday shopping from Adobe expects overall sales growth to slow from 2021, and the typical peak season calendar to be transformed by new early shopping events.
The forecast: Adobe expects US online holiday sales to reach $209.7 billion from Nov. 1-Dec. 31, 2022. That would represent 2.5% year-over-year growth from 2021. It would be a slowdown from last year, online sales grew 8.6% from the year prior amid the uptick in ecommerce spending as a result of the pandemic. The Adobe Analytics analysis covers over 1 trillion visits to US retail sites, 100 million SKUs and 18 product categories
What’s driving this year’s holiday season?
Early shopping: Key holiday shopping dates for this year actually aren’t even covered within the forecast. Adobe said Amazon’s new two-day Prime Early Access Sale, which runs Oct. 11-12, will impact Cyber Week performance later in the season as some consumers begin to shop earlier. Walmart is also running a deals event this week, and Target said it will begin Black Friday sales three weeks earlier than usual.
Economic uncertainty: Higher prices for necessities like food, gas and shelter amid 40-year-high inflation mean that shoppers could have less to spend on gifts.
Against this backdrop, discounts are expected to reach record highs. Deals will arrive for the typical Thanksgiving weekend and Cyber Week rush, then persist above 20% for the rest of the year. As a few examples:
Computer discounts are expected to reach 32%, up from 10% in 2021.
Electronics discounts are expected to reach 27%, up from 8% in 2021, with the best day to shop arriving on Thanksgiving.
Toy discounts are expected to reach 22%, up from 19% in 2021, with the best discounts arriving on Nov. 26, with top discounts expected on Cyber Monday. Top toys this year include Got2Glow Fairy Finder, Mini Brands, Squishmallows, LOL Surprise Dolls, Bluey toys, Disney Encanto and Cocomelon.
This year’s top gifts will include Dyson Airwrap Styler, Apple Watch Series 8/Ultra, AirPods Max/Pro, Stanley Tumblers and gift cards.
BFCM: Adobe projects Black Friday online sales will grow a slight 1% year-over-year to $9 billion. Meanwhile, Cyber Monday will drive a record $11.2 billion in spend, which would represent a 5.1% year-over-year increase. Cyber Week as a whole is projected to generate $34.8 billion overall, up 2.8% year-over-year. “These major shopping days are losing prominence as ecommerce becomes a more ubiquitous daily activity, and as consumers see discounts continuing throughout the full season,” Adobe notes.
Key quote: “The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week,” said Patrick Brown, vice president of growth marketing and insights at Adobe, in a statement. “Even though we expect to see single-digit growth online this season, it is notable that consumers have already spent over $590 billion online this year at 8.9% growth, highlighting the resiliency of ecommerce demand.”
A few more insights:
Top categories will include electronics, apparel and groceries, which will contribute nearly half of all online spend at $103.8 billion. Electronics will drive $49.8 billion of online spending, up 2.9% year-over-year. Apparel will drive $40.7 billion, down 6.7% year-over-year as shoppers return to stores. Grocery will account for $13.3 billion, up 10.5% year-over-year.
Buy Now Pay Later is expected to slow. In 2020, Buy Now Pay Later (BNPL) grew 31.6% year-over-year as the installment method rose to prominence alongside ecommerce. Revenue share from Jan.-Sept. 2022 has grown 5% over the same period of 2021. “While the growth has been partly affected by the broader economic environment and a slowdown in consumer spending, BNPL is also contending with challenges in demonstrating value to mass consumers,” Adobe notes.
Curbside pickup, however, is expected to remain widely used. An Adobe survey of 1,000 people found that 35% plan to use curbside pickup this year. In 2021, the method was used in 25% of all online orders. The peak for this service is expected on Dec. 22-23, as 35% of all online orders will be picked up during this time.Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”
