Much has been written about the inventory glut facing big-box retailers like Walmart (NYSE: WMT) and Target (NYSE: TGT) and online-only outlets like Amazon (NASDAQ: AMZN), but that has not dampened the outlook for holiday sales, it has just lowered expectations.
Deloitte, in September, predicted holiday sales would increase between 4% and 6% this year, totaling $1.45 trillion to $1.47 trillion during the November to January time frame. That follows a 15.1% increase in 2021. Deloitte also forecasts e-commerce sales to grow by 12.8% to 14.3% year over year and reach between $260 billion and $264 billion this season. This year, compared to previous seasons, will be muted but might still deliver some holiday cheer.
“The lower projected growth for the 2022 holiday season reflects the slowdown in the economy this year,” explained Daniel Bachman, Deloitte’s U.S. economic forecaster. “Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending. However, we anticipate more spending on consumer services, such as restaurants, as the effects of the pandemic continue to wane.”
He added that “inflation will also help to raise dollar sales, although retailers will see less growth in sales volume.”
Now comes a report that suggests small and midsize businesses are particularly poised to benefit this season.
Capterra, which produces business software, surveyed 306 small and midsize retail businesses in its 2022 Holiday Retail Preparations Survey to gauge their outlooks on the season. While the big retailers have plenty of inventory, the supply chain problems of the past two years have made life more difficult for SMBs.
Inventory on hand
Among the key findings are that 75% of SMBs believe they have the right amount of inventory on hand and 63% expect to see higher holiday profits compared to 2021. Advertising will increase in social media, with 61% of SMBs indicating they expect to ramp up marketing spend on social. Forty-five percent expect to offer more holiday deals this year in an effort to lure in shoppers that are battling inflation.
SMBs are increasingly targeting Gen Z and Gen Alpha shoppers, expecting that spending may be curtailed among older shoppers but not among the younger generations with young kids, or among teens and young adults. Retailers targeting these age brackets expect to reap higher seasonal profits compared to 63% of those targeting millennials and 54% targeting Gen X and boomer audiences.
