Shoppers browse for shirts in the kids section of Old Navy in Denver, Colorado.
Brent Lewis | Denver Post | Getty Images
January is usually an overlooked month for retailers.
Shoppers make returns and exchanges. They come to the store with a gift card. And they may pop out for workout clothes and other items to carry out their New Year’s resolutions.
But this January is riskier. The next few weeks, as many retailers’ fiscal years wrap up, could help determine whether the holiday season succeeds or fails. It’s also an important time to help stores clear excess inventory, and January could set the tone for 2023. Some economists and retail watchers expect the US to slip into recession.
So far, the results of the holiday season have been better than some economists and retailers had feared. According to MasterCard SpendingPulse data, from November 1 to December 24 he increased his sales by 7.6%. The figure includes restaurants and is not adjusted for inflation, which he rose 7.1% year-on-year in November.
Still, there are signs that shoppers may be running out of gas. My credit card balance has increased. The personal savings rate has fallen. In addition, sales of big-ticket items such as jewelry and electrical appliances are sluggish.
Moreover, American spending in the early years of the pandemic, fueled by stimulus money, boredom, and wasted savings, is difficult to compare.
Retailers enter 2023 given the fact that store traffic has already slowed during the peak week of 2023. holiday season.
Data from Placer.ai shows that six retailers — Walmart, Target, Best Buy, Nordstrom, Kohl’s and Macy’s — saw an average 3.22% year-over-year decline in foot traffic in the weeks leading up to Black Friday and Christmas. did. An analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations.
Retailers are more nervous now.
Stacey Widlitz, president of consulting firm SW Retail Advisors, said: “Many brands seem to be expecting a big wave in January.
She noticed more retailers were dangling gift cards to boost sales. for example, urban outfitters-owned retail chain Anthropologie on Friday offered $50 toward future purchases for online shoppers spending $200 or more. But that bonus cash he has to use by January 31 when the company’s quarter ends.
Widlitz said these offers are focused on encouraging shoppers to buy during a time when post-holiday lulls are common. It’s also a last chance for retailers to sell excess inventory and start the new fiscal year in a cleaner position.
“They just look like they’re trying to get people into the store at the beginning of the year,” she said.
But for some people more budget-conscious consumers It might be your chance.
In last month’s earnings report, walmart CEO Doug McMillon said he expects sales to increase as consumers feel overwhelmed with holiday spending. Like many other retailers, Walmart’s holiday season includes his January.
“These quarters can do well if the end of December and January are stronger if people are particularly price sensitive,” he said. “So that’s what I expect. .”
Discount stores are already luring high-end shoppers with low-priced groceries and household items. About 75% of the food market share in the last two quarters came from households with an annual income of $100,000 or more.
still like a rival Goal When Costcostruggled to sell discretionary goods that tended to generate higher profits than the sale of milk and paper towels.
What will the new year bring?
Economists have been watching consumer indicators closely since the beginning of the year.
On the positive side, unemployment is low and the job market remains very tight, according to S&P Global Market Intelligence economist Michael Zudinak. There are signs that inflation has eased Prices did not rise as expected in Novemberthe most recent month of federal data available.
On the other hand, food prices are still high, retail demand is weakening, and savings don’t seem all that strong.
Personal savings rates have fallen significantly. The percentage of disposable income people can save was 2.4% in November, according to the US Bureau of Economic Analysis. That’s down from a pre-pandemic average of 6.3%, according to S&P Global Market Intelligence, which compiled figures from 1991 to 2019.
Zdinak said low interest rates were unsustainable, especially as consumers spent the money they put into their savings accounts in the early months and years of the pandemic.
Economists at a market data firm expect the recession to start in the first quarter of 2023 and last for two quarters.
Zdinak said fewer orders and lower manufacturing will fuel a recession as many retailers are shedding unnecessary inventory after a sharp shift in consumer tastes in 2022.
Then there are headwinds for consumers. His Widlitz of SW Retail Advisors says reality may soon hit families who have run out of budget on gifts and vacation trips.
“When everyone denies vacations and makes it through February 1st, [credit card] Anytime it’s a statement, or January 15th, it’s like, ‘Oh!’,” she said.
— Caitlin Freda Contributed to this report.
Leave a Reply