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US Consumers Are Looking Forward to Holiday Shopping Despite Inflationary Pressures

December 22, 2022

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Inflation remains one of the most important issues facing the US economy at the moment. According to Statista, US prices rose 8.2 percent in September, compared to the corresponding month in 2021. The monthly inflation rate for American goods and services continues to undergo changes that have both customers and retailers concerned about the near future. Although prices for most products and services continue to increase and anxiety levels among consumers are also on the rise, consumers are surprisingly enthusiastic about the upcoming holiday shopping season.

According to a recent McKinsey survey, more than half of consumers said they are eager or excited for the shopping season, up from approximately 30% of consumers last year. This indicates that, despite recent inflationary pressures, the 2022 holiday season may be the first in which consumers are optimistic about the future since the COVID-19 pandemic started. However, with the US consumer price index (CPI) increasing more than expected in September, some are also expressing concerns that holiday sales may actually prove worse than expected this holiday season.

US Retail Sales Remained Unchanged in September

US retail sales remained flat in September, compared to August, according to Reuters. Considering that the prices of food, goods and rent increased last month, American consumers are believed to have shown resilience, despite the fact that they had less money available for other purchases. Although US retail sales remained unchanged last month, it may be worth noting that they were also down from a revised 0.4 percent growth rate in August, according to the Commerce Department. However, not all sales decreased or fell flat in September.

According to CNBC, general merchandise store sales grew 0.7% compared to the previous month, while sales reported by online stores, bars and restaurants, clothing retailers and health and personal care stores also increased 0.5%. However, miscellaneous store sales decreased by 2.5% in September, while gasoline also dropped 1.4%. The overall picture could be even more worrisome considering that the figures provided by the Commerce Department are not adjusted for inflation, indicating a decline in real sales in most sectors. According to Neil Saunders, managing director of GlobalData Retail, this data proves that US customers are becoming “more discerning and cautious about what they buy.”

Optimism Is on the Rise Among Shoppers

While the data provided by the Commerce Department may be worrying, the new McKinsey report shows that more than half of US consumers are feeling excited about the new shopping season, and are eager to buy new items and gifts. The number is considerably higher than the 2021 figure, when only one-third of respondents said they were excited about the shopping season. One reason shoppers are more interested in buying new items this year could be related to the fact that this is the first real holiday season after nearly three years of lockdowns and restrictions due to the COVID-19 pandemic.

The McKinsey Consumer Pulse Survey also featured some key insights about consumer behavior during the upcoming holiday season. According to the report, US consumers are becoming more mindful about how they spend their money, considering the inflationary pressures. Almost 50% of respondents said they would change stores if they could find a better deal elsewhere. Similarly, inflation and concerns about product availability seem to have prompted US shoppers to start their holiday purchases earlier this year, and 56% of the people questioned said they began shopping as early as October.

Converting Problems Into Opportunities

Surging inflation and other economic problems will continue to affect retail sales in the coming months. These issues are also expected to influence consumer behavior during the 2022 holiday season, prompting Americans to spend their money more wisely. US shoppers are also expected to begin holiday shopping earlier than usual this year, some as early as October. However, retailers should bear in mind that they can turn the current issues into real opportunities, especially by taking advantage of the growing optimism among US shoppers.