Holiday sales are projected to increase this Christmas shopping season. Holiday sales will likely increase 4-6% this year, according to an annual holiday retail forecast by Deloitte, the international business consulting firm. A forecast by Mastercard SpendingPulse™ predicts that holiday spending will increase 7.1%. Holiday spending has a big impact on retailers, which tends to affect pallet demand.
Deloitte’s retail and consumer products practice projects holiday sales will total $1.45 to $1.47 trillion during the November to January period. In 2021, holiday sales increased by 15.1% over the previous year.
Deloitte also forecasts e-commerce sales will grow by 12.8-14.3% this holiday season compared to a year ago. If correct, e-commerce holiday sales would hit between $260 billion and $264 billion this season.
Daniel Bachman, Deloitte’s U.S. economic forecaster, attributed lower projected holiday sales growth to the slowdown in the economy this year. “Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending,” he said. “However, we anticipate more spending on consumer services, such as restaurants, as the effects of the pandemic continue to wane.” Inflation will help boost sales dollars, but retailers will see less growth in sales volume, he added.
Inflation impacts consumer demand, observed Nick Handrinos, Deloitte’s vice chair and U.S. retail, wholesale and distribution, and consumer products leader, and they are expected to continue to shift how they spend their holiday budget this season. “Retail sales are set to increase as a result of higher prices, and this dynamic has the potential to further drive e-commerce sales as consumers look for online deals to maximize their spending,” he said. “Retailers across channels who remain aligned with consumer demand and offer convenient and affordable options can be well positioned for success this season.”
The upcoming holiday season has some momentum going for it, Mastercard’s projection noted. U.S. retail sales rose 11.7% in August compared to a year ago and 20.4% compared to 2019online sales in August. Experiential sectors of the economy – like restaurants, airlines, and lodging – experienced strong, double-digit growth.
What does this mean for pallet demand? Well, you might have a Christmas uptick in business earlier than expected this year. Why? The big box retailers stocked up earlier this season, wary of last year’s supply chain problems.
“Although supply chains were overall running well, there have been so many issues and so many potential further issues around weather and labor,” Freightos Group CEO Zvi Schrieber told FOX Business. “Many retailers have not taken any risks and stocked up early for the holiday season,” in June or July. The elevated inventory levels also reflect intentional over-buying to mitigate shortages and the easing of supply chain constraints.
That’s good news for consumers for two reasons: more goods will be available on store shelves, and Christmas sales are likely to be more robust this year.
Many businesses also ordered less this year because of bloated stock. FedEx said in its quarterly earnings report recently that demand for shipping is drying up. The shipping giant is now closing stores, freezing hiring, and grounding planes as inflation hammers America.
Now, retailers faced with an inventory glut are looking to get supply off their hands by rolling out shopping promotions and discounts early, a stark contrast to the pricing power that they held last year. For example, Walmart announced its top toy list for the 2022 holiday season a month earlier than last year, and Walmart, Target, and Best Buy announced earlier than ever pre-holiday sales events to attract more customers. Last year, retailers were plagued by supply chain issues that left many Americans staring at empty shelves. This year, inflation is pushing many customers to shop early in an attempt to hunt for deals and snag lower price tags.
More goods on the shelves and more deals to move more products means that pallets will likely start to flood back into the market after the holiday season in greater numbers than in the past two years.
“For the first time in a while, we’re anticipating deep discounts this holiday season,” Ted Rossman, senior analyst at Bankrate.com, told FOX Business. “The supply chain has gotten better to the extent that now a lot of retailers like Target and Walmart are complaining that they have too much stuff in certain categories, especially clothing and electronics and things like that.”
In fact, Walmart, Target, Macy’s and Kohl’s are among retailers that canceled some orders in September to better balance inventory levels, a strategy used at the start of the pandemic. As retailers reduce their inventories and offer discounts this holiday season, that means less demand for pallets and greater supply with more products offloaded from pallets.
