After two years of high spending, consumers are facing challenges such as rising interest rates, dwindling savings, returning student loan payments, and credit card debt.
“Call it discretionary, discerning, cautious, cautious,” said Telsey Advisory Group CEO Dana Telsey He told Yahoo Finance He lives. “It will be careful [holiday] season.”
JCPenney CEO Mark Rosen told Yahoo Finance that its customers, who typically earn a median household income of $75,000, are facing “bills that are $700 more per month” than they were two years ago, “whether that’s gas prices or Rent or food.
Retailers, in turn, face sluggish sales – unless they spread coupon books.
Best Buy (BBY), Nordstrom (JWN), Macy’s (M), Kohl’s (KSS), and Target (TGT) all saw same-store sales decline from a year ago in their latest quarterly earnings, while the value-oriented retailer Walmart ( WMT ) and TJX parent TJ Maxx ( TJX ) saw low-single-digit gains.
Online or in store, deals start earlier. Companies like JCPenney, Target, Best Buy, Walmart, and Macy’s started Black Friday-type deals in October and early November.
“Across the board, [retailers] “They are all heavily promoted to make sure they are gaining and retaining core shoppers and not being affected by the continued bearish commerce effect,” Julie Van Oelen, director of revenue at Rakuten Rewards, told Yahoo Finance over the phone.
Rakuten, a website extension that offers Cashback for online shoppersis offering up to 20% cash back at Nordstrom’s Bloomingdale’s store and at more than a dozen other retailers.
Read more: 6 ways to save money on your Black Friday shopping list
On a call with investors, Nordstrom CEO Eric B. Nordstrom said the retailer is using promotions as a lever to drive traffic, which has “declined slightly.”
Special offers like the members-only 5x Beauty Rewards “drive traffic” and help sign up for loyalty programs, Nordstrom said.
Where there are deals, consumers respond. From November. November 1 As of January 20, online shoppers spent $63.2 billion, up 5% from a year ago, according to an e-commerce report from Adobe Analytics.
Categories with deep discounts include electronics (24% off list price), toys (23%), apparel (21%), televisions (19%), appliances (17%), sporting goods (15%), and furniture (13%) %). . .
As a result, online gaming sales were up 76% compared to October, and hardware and apparel sales were up 30% and 22%, respectively.
This momentum is expected to continue throughout this week. During Cyber Week — the five-day period between Thanksgiving and Cyber Monday — the industry is expected to see $37.2 billion in online spending, roughly 17% of the holiday season total.
Affordable retailers benefit. On a call with investors, TJX CEO Ernie Herman said the company is “very well positioned to be top of mind among consumers” this holiday season, as recognition of its value resonates.
When there is “uncertainty in the macro environment,” customers expect upgrades, Kohl’s CFO Jill Timm said on a call with investors. Tim added that the chain plans to “really pay attention to promotions in the fourth quarter.”
However, all things considered, the current promotional landscape is not far from normal, according to incoming Macy’s CEO Tony Spring.
“It’s been 36 years now, and I’ve never known a fourth quarter to be so uncompetitive and unpromotional,” Spring said on a call with investors.
However, Spring said Macy’s will need to be “nimble and competitive with promotions as needed…to end the fourth quarter in a favorable inventory position.”
When asked which retailer would rank No. 1 this week, Van Olen said retailers that are on the ball and respond quickly to consumer preferences will have the upper hand.
Focusing on real-time data allows “brands and retailers to pivot and be as nimble as possible during this time.”
“The best thing we can all do together is brainstorm and be smart to create strategies that allow merchants to get rid of excess inventory,” she added.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke De Palma Or email her at [email protected].
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