Inflation has been the watchword for 2022, but as holiday shoppers go to the mall or order online (yes, it’s on, whether you like it or not), discounting will brighten their prospects, even as it cuts into retailers’ profit potential.
Amazon.com has wrapped up its attempt to duplicate the magic of its Prime Day sale, a traditional midsummer event, with its “Early Access Sale” that ran Oct. 11-12 and was – according to Amazon, at least – a big success. There was competition, too, from Target, Walmart and others. Eighty of the top 100 retailers, in fact, held sales events to compete with Amazon in early October. Discounts averaged 21%, which likely pulled sales forward from later in the season.
Many vendors, you see, have more inventory than they’d like. That spells opportunity, not just for customers, but for discount brands like T.J. Maxx and Burlington and even liquidators such as Channel Control Merchants. Higher-end brands may be forced to sell off much of their unwanted inventory to the bargain chains, boosting the latter’s sales.
Last-minute Deals This Christmas
Shoppers who procrastinate will also be in luck this year. Last-minute deals will multiply as the season winds down. With Christmas Eve on a Saturday this year, expect plenty of deep discounts for those doing their last-minute holiday shopping.
And expect those October sales to become an annual tradition, eating into Black Friday and Cyber Monday a bit, though both of those established sales days remain key.
By the numbers, then, all this discounting and persistent inflation means – for retailers – only a so-so season in terms of overall sales growth. Rising prices will account for most of the gain in revenues, rather than actual volume increases. Figure on nominal sales growing by 7%. Factoring in inflation, just a 1% increase from last year. Retailers with strong pricing power stand to do better than that. Those forced to discount or dump inventory, as we mentioned, may fare much worse.
Some hot sellers this holiday season, based on an early read of import data:
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- Apple’s AirPods Pro noise-canceling earbuds
- The new Apple Pencil, an electronic device for taking notes on touchscreens.
- Footwear, everything from fancy leather shoes to winter boots.
- Pickleball gear – paddles and more for America’s new paddle sport rage
- Luggage, as people take up post-COVID travel.
- Watches and jewelry.
- For kids, toy kitchens.
Whatever sells, more of it will be sold on social media platforms like TikTok.
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