Santa is here checking his list with elves, model sailboat and selection of beach tees on the wall behind him.
Garlands hang down the ceiling while women summer wears hang on the racks below them.
Welcome to the holiday season at B&B Department Stores, a retail store that has been selling clothes, beach wear and accessories for the last half a century at the Jersey shore.
It’s also one of the biggest times of the year for B&B and other retailers for the holidays.
However, economists argue that this holiday shopping season could be the most normal one (in terms of sales) since the pre-pandemic period, but it is also adorned with quite a lot of ambiguity.
The residents of the United States, exhausted by high prices, are looking for discounts more sparingly.
However, getting good deals may not be easy depending on the retailer in question. Rising debt and post-election sentiment are also holding some shoppers back, economists say, affecting the nation’s most crucial economic engine: consumer spending.
A ‘Reasonable,’ Not ‘blockbuster,’ Holiday
The National Retail Federation estimated that, based on its latest survey, Americans will spend an average of $902 this year on gifts, food, decorations and other items associated with the season.
That’s the highest projected per capita consumption since 2019, according to the data.
While it would also set a new record as well (and remember, those figures are not adjusted for inflation), this holiday season may not be quite as lively as the last one.
It may simply be “reasonable” or “normal” they suggest, the economists do.
“The consumer has got firepower and is able to out and spend, so it’s not going to be a miserable holiday by any standards,” said Neil Saunders, retail analyst and managing director at GlobalData Retail.
However, he said, “it’s not going to be a blockbuster holiday.”
‘if You Mark It Down, They Will Come.’ What Retailers Will Be Offering This Holiday Season
Santa is here with his list and elves, a model sailboat, and a choice of beach tees on the wall. Garlands hang down from the ceiling and women’s summer clothes are hanged on the racks below.
It’s holiday time at B&B Department Stores, which has been selling clothes, beachwear and accessories in the Jersey Shore for 50 years.
It is also one of the busiest periods for B&B and other retailers in the year.
As economists argue that this holiday shopping season could be ultimately one of the most normal ones in terms of sales since the pandemic, it is wrapped in quite a lot of uncertainty.
Stressed by high costs, Americans are now trying to find special offers more deliberately. Nevertheless, there could be a problem with the availability of such offers, depending on the retailer. Rising debt and post-election sentiment are also holding some shoppers back, economists say, affecting the nation’s most crucial economic engine: consumer spending.
A ‘reasonable,’ Not ‘blockbuster,’ Holiday
The National Retail Federation said in its latest survey that Americans are expected to spend $902 on average this year for gifts, food, decorations and other items related to the occasion.
That’s the highest projected per capita spending since 2019.
This holiday season may be a little less than the last one, though it would break records (though, those numbers aren’t adjusted for inflation).
It might just be downright “reasonable” or “normal,” economists say.
“The consumer has got firepower and is able to out and spend, so it’s not going to be a miserable holiday by any standards,” said Neil Saunders, retail analyst and managing director at GlobalData Retail.
However, he said, “It’s not going to be a blockbuster holiday.”
Lower Inventories And Retailers Acting Like Scrooge
It is the time of the year when retailers go all out on discounts and while some such as Target has signaled deeper cuts, others may just be a little more sparing.
Many leading retailers were overstocked last year — a legacy of post-pandemic supply chain and demand fluctuations. And when there is too much inventory in the back room and in the warehouses, the common remedy is to lower the price to make the excess sell.
Retailers have been much more selective this year, Saunders said, pointing out that consumer demand has been a little more volatile this time around as well.
“I believe there is a perception that they would prefer to exhaust the stock-out than to be holding too much inventory that they end up offering huge discounts and practically annihilating their gross profits,” he said.
That could very well mean fewer deals — especially deep, last minute discounts — for shoppers.
“We do expect to be less promotional than how we operated last year,” Franklin Bracken, chief commercial operator for Foot Locker, said during Goldman Sachs Global Retailing Conference in September, according to a FactSet transcript.
“Last year, we’re starting from a position of having excess inventory that we knew we had to clear and higher inventory levels across the board,” Bracken said, in the transcript. “Therefore, built into our guidance is that we will be less promotional year over year in the holiday.”
This time around at B&B’s locations in New Jersey, the recipe for success from past years will still be cooked up, Jeffrey Davidson, B&B’s executive vice president said to CNN.
“The Black Friday weekend is actually almost 30% to 40% of my entire month’s sales, so they are significant days,” he said.
A Shortened Holiday Season
A short shopping season, however, may compel the hands of the retailers who are eager to wait for a long time before offering deep discounts.
This year, there are only 26 days between Thanksgiving and Christmas, making it the shortest holiday shopping season.
It is also one of the reasons why ‘Christmas creep’ and the advance of holiday sales and promotions seem more noticeable this year, according to Shannon Grein, an economist at Wells Fargo.
“It’s really become Black Friday week,” she said.
Although it is not a large amount of discounting, retailers know that consumers are tired of price promotions and have some fatigue about spending on non-essential items, she said.
“So, I think there will be some discounting, but it will be used as a tool to get the consumer in the store, get the consumer online, and hopefully, lead to a larger number of purchases.”
But consumers this year are not as rich as in the previous years.
The high inflation rate has accumulated over three-plus years to erode purchasing power and savings account balances. Credit card debts are increasing, and so are the delinquencies, in an inflation-fighting high-interest rate environment.
“I do not believe we are at the moment in a situation that I would consider to be of concern from a debt point of view, from a buying point of view,” she said. “But we do continue to move in the direction of growing more vulnerable.”
As the degree of vulnerability varies across households and across different levels of the socioeconomic spectrum, total holiday sales are expected to increase by an average of 3.3% this year, based on Wells Fargo estimates.
If that proves to be the case, that would be less than in 2014 and the long-term average of 4.3%, in the opinion of Wells Fargo.
The National Retail Federation also anticipated the same level of increase in sales, with winter holiday expenditure expected to increase by between 2.5% and 3.5% from last year’s $979.5 billion to $989 billion.
Sentiment On The Upswing
A widely used monthly barometer of consumer confidence released by the University of Michigan last week rose to its best level since April.
A separate survey conducted by TransUnion found a bump in sentiment as well: As consumers prepared for the holidays, their outlook on their household balance sheets was more positive than it was at this point a year ago, according to Charlie Wise, TransUnion’s senior vice president, research and consulting. Pricing pressures are still a focus for consumers and a concern; however, wages have increased more than the rate of inflation over the past year and a half, Wise said.
Consumers may feel really bad about the inflation; but when push comes to shove, for many of them, they have the income, the spending power that can fuel a pretty decent holiday shopping season,” he said.
November’s University of Michigan consumer sentiment survey also showed some stark differences in economic outlooks: In the University of Michigan’s consumer sentiment report, Oxford Economics found that consumer expectations amongst Republicans increased by 45 percent after the election while those of Democrats declined by 19 percent.
Although the reports show a polarized political environment, the index is still pointing up on the whole.
“Lower gasoline prices, positive returns in equity markets, and declining interest rates have provided consumers with a reason to be optimistic,” the research note published on Friday said.
Community-driven Support
In the 25 years that Dan Marshall and his family have run a toy shop in St. Paul, Minnesota, there’s a fairly consistent inconsistency:
“Election years are always kind of weird years,” said Marshall who owns Mischief Toy Store, a store that sells games, toys, gifts, memorabilia and comics for all ages.
While there is often a wait-and-see approach to spending before the election, for many customers of Mischief, which is a culturally aware and socially conscious agency, November 6 was a different story.
“I believe people were really stressed before election and now that election is over, the stress for our customer base has not gone away,” he said. “So, we don’t know quite what to expect.”
Marshall still believes that Mischief will have another great Black Friday, Small Business Saturday and, of course, the holiday season.
“I suppose that people will be coming out for Black Friday which is a big weekend for us and our sales should be pretty good because people want to support local institutions they trust during uncertain times,” he said.
Mischief also could continue to benefit from those people — particularly the younger ones — who want that face-to-face experience, to see the products and get suggestions for someone they are buying for, he said.
“The default is just to order something up, and our mission is to create this environment where people will discover something new that they hadn’t even thought existed, where they’ll get some great ideas, where they’ll get personal service and free gift wrapping and stuff like that,” he said.
“And it’s fun, because a lot of times, people had no idea that this is what a retail store used to be — and still is.”