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Data: Early holiday shopping boosted by urge to 'splurge' in face of inflation, supply issues

·3 min read
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With fewer COVID-19 restrictions on in-person shopping, data suggests digital commerce revenue is already rising, signaling that economic headwinds aren't slowing the consumer's willingness to spend.  

With consumers kicking off the holiday season early given supply chain bottlenecks, revenue from web purchases is up 18% in the U.S. and 8% globally year-over-year, according to Salesforce digital commerce sales data. 

"That tells us that consumers have read the headlines about potential issues with product availability and they're shopping early," Rob Garf, VP and GM of Retail at Salesforce, told Yahoo Finance in a recent interview.

Meanwhile, many Americans are suffering from sticker shock after seeing prices rise in recent months. The average selling price (ASP) has soared this holiday season compared to last year, with prices jumping 12% in the U.S. and 11% globally.

"The inflationary concerns are coming to bear, but there's still a splurge," Garf added. "Consumers are happy, they're feeling good and positive and they're shopping early." 

Major retail earnings out this month revealing a divide between retailers trying to keep their prices low for consumers, and those that are able to pass the costs to shoppers this holiday season. However, Salesforce found that for the second half of the year, retailers are going to absorb about $223 billion in incremental cost of goods sold. 

"They're going to absorb much of that as I mentioned, but they are going to pass some of that along to the consumers, but there is this sense of positivity and consumers are buying," Garf said. 

'Discount chicken'

LOS ANGELES, CALIFORNIA - NOVEMBER 19: People attend the grand opening event of the new Apple store at The Grove on November 19, 2021 in Los Angeles, California. The original Apple store in The Grove was opened in 2002 but was redesigned in a new location with twice the space and opened today in time for the holiday shopping season. (Photo by Mario Tama/Getty Images)
People attend the grand opening event of the new Apple store at The Grove on November 19, 2021 in Los Angeles, California. (Photo by Mario Tama/Getty Images)

Many Americans began shopping for holiday gifts as early as Halloween — heeding retailers' warnings that supply chain issues could lead to shortages of popular Christmas gifts. 

In fact, retailers have pulled back on early-season discounts with rates in the U.S. down 16% and 10% globally, Salesforce data found. 

"We're typically seeing an increase at this time of year. I've been calling it this case of discount chicken, where retailers going into the holiday season have this great thought out holiday calendar, and after the first week they rip it up and they call audibles and they discount and they chase the margin," Garf told Yahoo Finance. 

"Consumers might not win the game of discount chicken this year," he warned. "Buy early, buy often, especially with product availability issues." 

With inflation — which is at a 31-year record high with prices of goods and services up 6.2% since last year — certain product categories are seeing an uptick in sales this holiday shopping season: luxury handbags is up 59%, furniture 44%, and footwear at 37%. 

"What we see is more experiential categories, right? We're going from this last year and a half of needs and we're shifting to wants," Garf said. 

Even with sales already in full force at many stores, retailers still expect a big turnout on Black Friday, traditionally among the biggest shopping days of the year. 

"For digital in particular, we'll see spikes on Black Friday," Garf said. "Two-thirds of [shoppers] say they will go into the store again. It's really a balance of the digital shopping and the store shopping and really being able to blend that together, creating a seamless experience." 

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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