Consumer Caution Marks Holiday Shopping

Consumer Caution Marks Holiday Shopping

THE WHY? Black Friday sales in the U.S. have shown consumers are spending cautiously, signalling a potentially subdued holiday shopping season. This trend may result in modest earnings for retailers in the upcoming year, contrasting with the higher spending seen in the post-pandemic period.

THE WHAT? Data indicates that online sales are experiencing minimal growth, with predictions of the slowest increase in recent years. Factors such as lower personal savings post-pandemic, persistent inflation, and higher interest rates are influencing consumer spending habits. Many shoppers are waiting for bigger discounts, and some have been disappointed with the current offers. Retail experts suggest that deeper discounts might emerge as the holiday season progresses.

THE DETAILS The shift in consumer behaviour can be traced back to the unusual spending patterns during and after the pandemic, fueled by extra savings and stimulus checks. Last year’s significant discounts have set high expectations for this year, challenging retailers to balance attractive pricing with profitability. Despite low unemployment suggesting a capacity for consumer spending, there is a noticeable trend towards more cautious and selective purchasing. This change is leading to a more conservative holiday season for both consumers and retailers.