Retailers across the country are bracing for a tougher holiday shopping season than last year, when consumers opened their wallets as pandemic lockdowns eased. Deloitte estimates sales will increase 4 percent to 6 percent this holiday season, compared with the 15.1 percent increase recorded in 2021.
In anticipation of slower sales growth, retailers plan to cater to consumers who are looking for more bargains and a longer shopping period so they don’t have to spend their entire holiday budget in one month.
“It’s not a disastrous holiday season, it is a more subdued holiday season than last year,” said retail analyst Neil Saunders. “Consumer demand has not collapsed in a heap.”
Americans have been dealing with high inflation for much of 2022, spending more on food, fuel and housing and pulling back on discretionary items such as travel and dining. Consumer prices jumped 8.3 percent in August, despite the Federal Reserve’s rate hike campaign to quell inflation through higher interest rates.
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Last year, consumers spent their holiday dollars earlier in the season, largely because they were worried about the supply chain disruptions that extended shipping times and left some shelves empty and shoppers disappointed. This year, analysts and retailers expect people to similarly shop early in the season — but now its because inflation has made it necessary for people to hunt for deals and budget more carefully, rather than spending it all in the week or two before peak holiday season.
The swing from pandemic concerns to inflation concerns will also probably affect hiring.
“A year ago, there was a lot of concern around covid and hiring and absenteeism,” said Michael Baker, a senior retail analyst at DA Davidson. “I don’t think that’s an issue this year.”
That could be a piece of the reason Walmart is taking a slower approach to hiring this year — the nation’s largest private employer said it planned to hire only 40,000 workers for the season, including seasonal store workers, customer service employees and permanent truck drivers. Last year’s goal was 150,000 store workers, although mostly in permanent roles.
Part of this year’s slower approach is likely because Walmart hired heavily in its warehouses last season, and held onto employees throughout the year, Saunders said. Last fall, the Arkansas-based retailer said it would add 20,000 workers for its distribution and fulfillment centers.
It’s also probably an attempt to curb spending. Walmart warned this summer that consumers were cutting back on discretionary items due to inflation, and cut its profit forecast.
“They want to really try to batten down the hatches on cost so they can get the bottom line looking better,” Saunders said.
Walmart spokesperson Nick DeMoss said in a statement that the company’s “staffing is stronger heading into this holiday season than it was last year.”
“We know price is top of mind for Walmart customers and will continue to be a significant factor as the holiday season approaches,” he said. “Customers are shopping early, and finding the lowest prices is a top priority.”
Target has kept its hiring plans steady; the Minneapolis-based chain expects to hire as many as 100,000 workers for the holiday shopping season, matching last year’s plan but below its 2019 and 2020 seasons.
Some analysts are expecting consumers to shift back to shopping in stores a bit more than they did during the pandemic. FedEx sent a shock wave through Wall Street last week when it warned of softer shipping demand.
“We are seeing a lot of retailers that are telling the parcel carriers they don’t need as much capacity as last year,” said John Haber, the chief strategy officer at Transportation Insight, a supply chain consulting company. Haber attributes that both to people shopping in-store as well as people cutting back on discretionary spending.
Amazon has not yet announced its hiring plans for this holiday season, but said earlier this year that it had hired too many workers in its warehouses to keep up with the pandemic online-shopping boom. As people started to emerge from pandemic-era restrictions and worker absences due to covid eased off, the e-commerce giant found itself with more workers than necessary. (Amazon founder Jeff Bezos owns The Washington Post).
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Retailers, as well as employers across many industries, continue to deal with a tight labor market where workers have more power than they have for years. Both Walmart and Target advertised competitive starting wages and benefits for existing employees, including that they would get first dibs on additional hours and scheduling flexibility.
Target said Thursday it will hold “deal days” events on Oct. 6 through Oct. 8, and will extend its price match program from Oct. 6 until Christmas Eve. Walmart said it would start doing curbside returns at some stores in October, aiming to make it easier for people to bring back gifts.