Early Discounts Backfire: Why Online Holiday Sales Are Set To Be Weakest on Record

Cropped shot of an unrecognizable man using a credit card and a laptop to shop online at home.
Moyo Studio / Getty Images

Retailers could face a less-than-merry holiday shopping season as many consumers look to put on the brakes after blowing much of their holiday budgets on deeply discounted items in recent weeks.

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Those discounts were caused by excess inventory at many retail chains, which had to mark down merchandise to move it off the shelves, Yahoo Finance reported. Inflation led to further discounts just to get cash-strapped shoppers to spend money.

With so many shoppers having already taken advantage of discounted goods, the expectation is that demand for holiday sales will take a dive — especially for online orders.

Online sales for the 2022 Black Friday are expected to increase only 1% from a year ago, according to estimates from industry tracker Adobe Analytics. Cyber Monday sales are expected to do a little better, at 5.1% year-over-year growth. However, overall online spending throughout the holiday season is forecast to increase only 2.5% — the smallest gain since Adobe started tracking the figure in 2015, CNBC reported. Sales could even decline, based on Adobe’s projected sales range of negative-2% to positive-5%.

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“The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week,” Patrick Brown, vice president of growth marketing and insights at Adobe, told CNBC.

Like last year, the 2022 holiday shopping season has gotten off to an early start. The difference is that the early start in 2021 was largely due to supply-chain logjams that had shoppers scrambling to buy up gifts before they were sold out. In 2022, retailers are offering early deals to clear out inventory or get a jump on the competition.

Major retailers like Amazon, Target and Walmart are either running more discount days than in the past or offering discount days earlier than usual.

Meanwhile, FedEx’s Ground division is expected to lower its volume forecasts to reflect customers’ plans to ship fewer holiday packages, Reuters reported. Mastercard’s SpendingPulse report, released last month, also forecast a holiday shopping slowdown.

The good news for shoppers is that they’ll have a larger-than-usual assortment of discounts to choose from in 2022 vs. previous years. A KPMG survey found that 85% of holiday shoppers are concerned about inflation, and that about one-third will opt for cheaper gift categories.

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“Consumers will be looking for promotions this holiday season, and retailers should be looking to respond by having desirable gifts for the budget conscious consumer,” said Matt Kramer, head of KPMG’s consumer and retail sector, told CNBC.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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