Attempting to predict the future is never easy, especially when it comes to retail and e-commerce, two industries that are regularly impacted by new trends and disruptions. However, these new trends and changes can also provide online retailers with opportunities to analyze new data, make better plans and achieve great results. While inflation, high energy prices, and other problems have affected consumer sentiment, recent data shows that online holiday sales could exceed expectations this year. According to the Voice of America (VOA), shoppers have already spent a record $9.12 billion online on Black Friday alone.
Online stores rely on discounts and promotions for most items to boost sales despite inflation, and this strategy seems to be successful so far. According to Adobe Inc.’s data and insights from Adobe Analytics, online spending increased by 2.3% on Black Friday. The company had previously estimated a smaller increase of just 1% for the same day. Black Friday is only a small part of the entire holiday shopping season, but recent data suggests the trend will continue throughout the season. Adobe Analytics further revealed that e-commerce sales reached $11.3 billion on Cyber Monday, the highest figure ever for this day.
Why Inflation Continues to Be Problematic
Inflation, high energy prices, and economic and geopolitical issues will continue to disrupt e-commerce and the retail industry as a whole. Not only have US retailers braced for a bleaker holiday season due to inflation, but consumers also point to this issue when asked if and why they are cutting back on shopping in 2022. 451 Research’s “Voice of the Customer: Macroeconomic Outlook, Consumer Spending (Population Representative), Holiday Spending Preview 2022” shows that approximately 84% of respondents who scaled down their holiday spending compared to 2021 cite inflation as the primary reason for their decision.
However, inflation is not the only problem affecting holiday spending this year. According to the same research, approximately 47% of respondents said energy prices are the most important factor behind the cuts, while 24% cited product availability and 21.4% said they will simply travel less this year. However, the good news is that all of these issues seem to impact online retailers less than traditional stores. Approximately 72% of the study’s respondents said they will spend the same or even more online during the holidays compared to a year ago.
Why E-Commerce Is Less Affected by Inflationary Pressures
The recent COVID-19 pandemic has undoubtedly influenced trends in numerous industries worldwide. According to the US Census Bureau, the healthcare crisis forced numerous Americans to work from home and avoid indoor activities, including going to malls, brick-and-mortar stores, and restaurants. As consumer behavior changed and evolved, e-commerce continued to expand, and online stores across the country started to develop new online business strategies to remain competitive. In fact, online sales increased by $244.2 billion during the first year of the pandemic alone, and the trend continued at a lower pace even as the pandemic subsided.
According to Vivek Pandya, lead analyst at Adobe Digital Insights, online demand has remained strong despite inflation and other economic pressures because American consumers have started to value the ease and convenience of shopping online more during the pandemic. Despite recent worries that Black Friday, Cyber Monday, and Cyber Week sales would disappoint, e-commerce sales have exceeded expectations over the entire period. American consumers may not be willing to spend lavishly at the end of 2022, but online sales remain robust across the country during the holiday season, and the e-commerce sector will likely thrive as a result.
A Brighter Future for e-Commerce
According to CNN Business, US shoppers spent more money on toys, TV sets, and clothing on Black Friday and at the beginning of the holiday season, despite surging inflation and new recession concerns. The National Retail Federation has recently announced that a record number of people have already purchased holiday items and gifts in stores and online. The trade group has issued a new forecast, saying holiday sales are likely to increase 8% over last year. While this figure indicates slower retail growth compared to 2021, it still shows a healthy market, despite inflationary pressures.
