Holiday shopping: Why surging inflation, supply chain issues and a pandemic aren't deterring consumers
Holiday sales could grow as much as 11.5% compared to 2020
The highest inflation in nearly four decades, ongoing supply chain woes and concerns regarding the omicron variant of the coronavirus aren't stopping U.S. consumers from splurging on their loved ones this holiday season.
"People have gone into this holiday season in a sense wanting to make up for some of last year," Katherine Cullen, the senior director of industry and consumer insights at the National Retail Federation, told FOX Business.
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Although last year was a strong sales season, "many localities are saying there are safe ways to gather with family, there are safe ways to travel" this year, which means people are not having to cancel holiday plans, according to Cullen.
"I think people are looking to spend even more this year because they want to celebrate with family and friends," she added. "They're splurging on gifts. They're spending on travel."
For instance, NRF data in October showed that those over 65 years old planned on spending more on gifts this year compared to 2020.
Cullen said this could be because they are expecting to celebrate the holidays with their grandchildren or younger relatives.
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"That emotional mindset is really important when we look at spending because that is driving some of what we're seeing right now," she said.
During the first 11 months of the year, sales were already up 14.2% over the same period in 2020, according to the NRF, which calculates retail sales excluding automobile dealers, gasoline stations and restaurants.
As a result, the NRF projected that 2021 would be another "strong holiday season," especially since retailers and consumers were prepared to combat the economic headwinds early on, Cullen said.
RETAIL SALES ACCELERATE AS SUPPLY CHAIN CRISIS CAUSES EARLIER START TO HOLIDAY SHOPPING SEASON
Retailers started offering deep discounts as early as October and reminded shoppers to begin their shopping early, so they have time to find items that they need even if things are back-ordered, Cullen explained.
"That messaging on the part of retailers … seems to have paid off," she said.
Though roughly 30% of holiday shoppers said that they were having trouble finding items, they're not necessarily giving up, Cullen added.
Instead, "they're looking around other places. They're buying a substitute," she said.
On top of that, Cullen said consumers told the NRF that the categories most impacted by inflation are food and fuel, which isn't necessarily deterring people from buying gifts.
Cullen said growing concerns about the omicron variant are also unlikely to curtail shopping this late in the season.
"A lot of people have already started their holiday shopping, and so a lot of those gifts have already been purchased," she said.
2021 HOLIDAY SALES PROJECTED TO HIT NEW RECORDS
According to NRF data, 61% of consumers already started their holiday shopping by early November, "which is a record amount," Cullen added.
In November alone, sales were up 14% year over year, according to the NRF.
As a result, NRF CEO Matthew Shay projected that overall holiday sales throughout November and December could grow as much as 11.5% over 2020.
"There is continued uncertainty with COVID continued uncertainty ... concerns about inflation coming up, concerns about the new variant," Cullen said. "But, by and large, we are in a very different place than we were last holiday season."