Explaining the Current Online Shopping Slump
By: James Flippin · October 11, 2022 · Reading Time: 3 minutes
Retailers had to deal with difficult circumstances over the past few years. To start, it has been nearly impossible to accurately predict consumer demand during and after the COVID-19 pandemic. These inaccurate predictions have led to both shortages and surpluses.
On top of that, retailers have also had to deal with soaring inflation, which squeezes their consumer’s budgets as well as their own profit margins.
To compensate, many in the sector have launched holiday discounts earlier than ever. Many went live this week. But it seems these early discounts are not having the impact that retailers had hoped for. “Discount fatigue” could be one reason why. In other words, shoppers are getting accustomed to the new low prices, reducing their urgency to make a purchase.
More Like “Dark-Gray” Friday
Black Friday is historically the biggest shopping day of the year. Thanks to the rise of online shopping, sales have increased overall since consumers have multiple ways to spend. Yet early projections suggest this year’s Black Friday could be more accurately described in a shade of gray.
Experts predict that online sales from this year’s Black Friday will increase just 1% from last year. Cyber Monday’s sales are projected to grow just 5.1%, and overall online spending is forecast to grow just 2.5%. This 2.5% growth would be the smallest increase since 2015.
In fact, there’s even a chance that sales could decline year-over-year.
A survey by KPMG found that a staggering 85% of holiday shoppers are concerned about inflation with 34% expecting they will opt for cheaper gifts. With this in mind, retailers want to make it as easy as possible for consumers to spend money.
According to KPMG’s head of consumer and retail sector Matt Kramer, the key is for retailers to cater to the budget-conscious consumer. As a consumer, this is potentially good news.
It means that you should be on the lookout for better-than-average holiday deals that encourage you to spend. Sticking to a budget and being aware of how inflation has sapped purchasing power are arguably the most important steps when looking online for deals.
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