Online sales in the U.S. should reach US$209.7 billion during this year’s holiday season, an increase of 2.5% over 2021, according to a report released Monday by Adobe.
The report forecasts sales from Nov. 1 to Dec. 31, 2022, and is based on analytics gathered from more than one trillion visits to U.S. retail websites and 100 million SKUs in 18 product categories.
“Online sales had a huge surge in 2020 and 2021,” explained David Swartz, a consumer equity research analyst with Morningstar Research Services in Chicago.
“Two and a half percent may not be an extraordinary number, but it’s still impressive,” he told the E-Commerce Times. “Online had two huge years in a row, so the fact that online sales are up at all shows just how strong they are. It shows that e-commerce has held up even as the stores have reopened.”
Adobe expects consumers to start spending on holiday gifts earlier this year, starting with Amazon’s second Prime Day event of 2022 on Tuesday and Wednesday this week.
The report noted that early buying could impact Cyber Week sales later this year. It added that other factors that could curb holiday spending are elevated prices for staples, such as food, gas, and housing, and rising interest rates.
“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,” Adobe Vice President of Growth Marketing and Insights Patrick Brown said in a statement.
“Even though we expect to see single-digit growth online this season,” he continued, “it is notable that consumers have already spent over $590 billion online this year at 8.9% growth, highlighting the resiliency of e-commerce demand.”
Adobe’s growth predictions may be too rosy, maintained Rob Enderle, president and principal analyst at the Enderle Group, an advisory services firm in Bend, Ore. “Given the potential for a catastrophic event, man-made or otherwise, with global implications before year-end, I think this estimate is optimistic,” he told the E-Commerce Times.
“If nothing else happens,” he continued, “I believe the prediction would be accurate, but the odds of nothing else major happening are fairly long.”
“If interest rates alone go up sharply, that should reduce spending as intended, significantly,” he added.
“Predictions, when you have this many moving parts, Enderle enumerated — elections, wars, interest rate increases, inflation, economic reports, stock markets in motion, and disasters — are iffy at best, and this one has a substantial amount of downside risk.”
However, Adobe’s forecast is conservative compared to some others. Global audit, tax and consulting services provider Deloitte, for example, predicts e-commerce holiday sales will grow 12.8% to 14.3% year-over-year in 2022 and reach between $260 billion and $264 billion. That compares to 15.1% growth during the same period in 2021.
“The lower projected growth for the 2022 holiday season reflects the slowdown in the economy this year,” Deloitte’s economic forecaster Daniel Bachman said in a statement.
“Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending,” he explained. “However, we anticipate more spending on consumer services, such as restaurants, as the effects of the pandemic continue to wane.”
He added that inflation would also help to raise dollar sales, although retailers will see less growth in sales volume.
Big Cyber Week Spending
Adobe also predicted that Cyber Week, which runs from Thanksgiving Day to Cyber Monday, will produce $34.8 billion in sales, up 2.8% over 2021. That’s 16.3% of all online sales for the season, down from 16.6% in 2021.
Adobe expects Cyber Monday to be the year’s biggest shopping day, with shoppers spending $11.2 billion, an increase of 5.1% over 2021.
Other primo shopping days won’t do as well, according to Adobe. It forecasted Black Friday sales to increase by only 1% over 2021, to $9 billion, and Thanksgiving Day sales to sink 1% year-over-year, to $5.1 billion.
The report noted that these significant shopping days are losing prominence as e-commerce becomes a more ubiquitous daily activity and as consumers see discounts continuing throughout the entire season.
“I don’t think the traditional calendar matters that much anymore,” Swartz said. “People shop online anytime, anywhere.”
“It’s not like the old days when people would go to the department stores on the day after Thanksgiving looking for deals,” he continued. “Now they know there’s going to be deals all through the Christmas season.”
“All this talk about stores being open on Thanksgiving doesn’t matter,” he added. “You can always shop online on Thanksgiving.”
Cynicism About Discounts
Sixteen percent of consumers shop year-round for holiday gifts, observed Kassi Socha, a consumer and culture analyst with Gartner, citing results from a recent survey conducted by her firm. That’s why retailers near a year-round gift strategy, she said.
“By having an ‘always on’ gifting strategy, retailers will be better positioned to succeed during the traditional winter holiday season,” she told the E-Commerce Times. “We’re not recommending retailers have snowflakes and Christmas trees on their websites year-round. What we’re recommending is that they have gifting hubs that offer gift ideas year-round.”
“Traditional holiday promotional times like Black Friday and Cyber Week are still valuable, but consumers are expecting more than 40% discounts,” she said. “They’re looking for great value. They’re looking for a surprise and delight[ful] experience. They want more than just a discount that they can find from that retailer at another point in the year.”
Adobe further predicted discounts would be “massive” during this year’s holiday season. Discounts for computers are expected to be as high as 32%, up from 10% in 2021, it noted, while electronics discounts will hit 27%, up from 8%, and toy discounts will reach 22%, up from 19%.
Other discount categories will include televisions at 19%, compared to 11% in 2021; apparel at 19%, versus 13%; appliances at 18%, up from 4%, sporting goods at 17%, up from 6%; and furniture and bedding at 11%, versus 2%.
Despite Adobe’s discount forecast, consumers don’t seem to be getting the message. According to the Gartner survey, 75% expect to see fewer or the same number of discounts this year as they saw last year.
“Consumers are wary because there are so many deals happening year-round now,” Socha said. “It’s cynicism among consumers, but it’s not the reality of what they’ll experience.”