New York CNN –
Buyers will be spend less during the holidays compared to past years, major retailers say.
Best Buy, Lowe’s and Kohl’s all reported declining sales during the latest quarter Tuesday and expect holiday sales to decline from a year ago.
“Consumer demand has been even more erratic and difficult to predict,” Best Buy CEO Corie Barry said in a statement, noting that the company was “preparing for a very deal-focused customer.”
Holiday sales are expected to grow this year, but at a slower pace.
In 2021, holiday shopping sales are up 14%, and last year they grew a healthy 5%. But Moody’s Investors Service said in a report today that consumers are “losing spending power” and that holiday sales will increase only 1% to 3% this year.
Shoppers have become more cautious in the face of inflation, higher interest rates and the resurgence of student loan repayments.
Moody’s analysts say the high cost of living and dwindling savings will push low- and middle-income consumers to reduce their vacation budgets.
Many customers are forgoing major discretionary purchases like televisions and furniture and focusing on essentials. Walmart, Costco and discount clothing stores like TJ Maxx could benefit from shoppers’ search for value, Moody’s said.
“Retailers offering a combination of value and non-discretionary essentials will see their sales outperform the broader retail sector this holiday season,” according to Moody’s.
Since the Covid-19 pandemic in 2020, retailers have started Black Friday deals earlier than ever to attract shoppers.
“One trend that persists is to extend the Christmas holidays. The Christmas effect has become particularly pronounced,” said Berna Barshay, an independent retail analyst.
Retailers have also been busy higher losses from shoplifting.
But there are signs that these problems may be easing.
Dick’s Sporting Goods in August blamed a “increasingly serious” problem of theft due to the collapse of profits. But the company reported Tuesday that its profits rebounded this quarter.