Some people wish it was Christmas every day, while others - pre-ghost visit Scrooge for instance - would rather the holiday season not be a thing at all. Splitting the difference is Christmas in July, a sort of check in on the big day almost equidistant from December 25th that offers the excuse to turn on a few Hallmark Channel movies and assess the decoration situation. With that in mind, we'll check in ourselves - both on how last year's holiday season played out and on what to expect for Christmas 2023 (though it's a little steamy out, so we'll skip the cup of hot cocoa).
Holiday Season 2022 Recap
While inflation was already rampant and consumer spending's shift from goods to experiences was already well underway, the holiday shopping season in 2022 was strong all things considered for retailers - though there were signs of softening. The National Retail Federation (NRF) tabbed November-December retail sales at $936.3 billion, up 5.3% over the same period in 2021. That gain fell short of NRF's forecast of a 6-8% increase over the prior year and well below the previous two year over year increases of 13.5% from 2020 to 2021 and 9.3% from 2019 to 2020.
The Federation indicated persistent (though falling) inflation and high interest rates were tamping down spending, yet most categories did rise year to year - with online shopping leading the way at 9.5% higher than 2022. On the flipside, furniture and home furnishings store sales were down 1.1% and electronics and appliance store sales dropped 5.7% from the prior holiday season.
At this time last year, we were already noting retailers felt a bit overstocked, and that's been borne out in the slow, but sure attempts to right-size inventory as this year has progressed. Freight was still moving for the Christmas shopping season, but the slowdown that's persisted in the industry was already underway. So what's in store for the holiday season in 2023?
Holiday Season 2023 Outlook
The outlook for holiday season 2023 retail and shopping is still rather muted, even with a somewhat surprisingly resilient economy that has seen inflation continue to decline. A recent CNBC Supply Chain Survey found 71% of respondents worried that consumers will cut back on holiday spending this year. That's reflected in lower ordering activity by retailers heading into what is traditionally (but not likely to be this year) peak shipping season. As noted before, the right-sizing process from last year's over-ordering is still not yet complete.
Interestingly, though a plurality of 43% expect a lower peak season than last year, 26% project the same amount of orders and another 21% actually expect more. It's not just about quantity though, it's about what retailers expect consumers to buy - and how much they'll spend. So the survey respondents are focused on middle price point items, which make up 77% of all items being ordered for the holidays. Another 52% of orders are expected to be promotional products like free gifts with purchase. Only 17% of orders are considered high-end apparel, electronics or memorabilia.
Also reflecting this expected lower spending behavior is the feeling in 67% of respondents that consumers will be shopping for sales and discounts. One supplier suggested retailers could use that possibility to their advantage to clear out warehouse stock and draw consumers to make additional purchases while they're at it on the sale front. Perhaps one challenge that sellers of new products will have to wrestle, is an increased use of the resale market.
Freight and logistics pros have plenty of concerns that stretch into the 2023 holiday season, led by labor unrest and inventory issues. If you're dealing with any of these worries, you'll need a partner who can help. Reach out to us, and we can work with you on the right solutions to keep your business successful. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.