Retailers Prepare to Close the Holiday Quarter: This Season was Different

As holiday shopping is coming to an end, the next few weeks would help determine the overall success of the 2022-2023 holiday quarter for retailers – so far, signals are mixed

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Retailers Prepare to Close the Holiday Quarter. Image: unsplash

Although the main bulk of holiday shopping takes place in December, January is an important month for retailers. They typically clear out excess inventory and make the last marketing efforts to improve the financial results before the end of a holiday quarter and the fiscal year.

Holiday sales volume

This holiday season has been tough for consumers, with high inflation and rising living costs impeding their purchasing capabilities. At the same time, Mastercard Spending Pulse found that US retail sales, excluding the automotive industry, increased 7.6% year-over-year in the peak shopping period from November 1 through December 24. However, the given figure is not adjusted for inflation, which rose 7.1% YoY in November.

Besides, in January shoppers often make returns and exchanges. According to Insider Intelligence, 18% of both UK and US consumers return items because they intentionally order multiple sizes to keep only those that fit. Rising return rates are leading to billions of dollars in lost revenues for retailers, so the preliminary sales results may as well change.

Store traffic and shopping trends

Furthermore, despite moderate growth in sales, store traffic lagged during the peak weeks of the holiday season. Anonymized data from customers’ mobile devices shows that foot traffic dropped by an average of 3.22% year-over-year across six major US retailers — Walmart, Target, Best Buy, Nordstrom, Kohl’s and Macy’s. When compared to pre-pandemic shopping patterns, store traffic declined by nearly 5%.

The lack of in-person visitors is partly compensated by the growth seen in online sales. Thus, e-commerce sales grew 10.6% compared to the same period last year. This holiday season, online sales made up 21.6% of total retail sales volume, up from 20.9% in 2021 and 20.6% in 2020.

Nevertheless, inflation altered the way US consumers approached their holiday shopping. Sales of big-ticket items like jewelry and electronics have weakened. More hunting for the best deals and promotions was observed.

Therefore, many retailers tried to boost their sales with free gift cards. However, such bonus offers typically must be used by Jan. 31, when the fiscal quarter ends.

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