Online Holiday Discounts Could Reach Record Highs, Report Says—But Inflation Is Expected To Cut Into Spending

Topline

Online sales during the 2022 holiday shopping season could hit $209.7 billion, according to data from Adobe Analytics, though the number represents the slowest pace of growth since 2015 due to expected record high discounts as companies contend with stock surpluses and spenders worried about inflation.

Key Facts

The projected $209.7 billion in sales from November 1 to December 31 represents just a 2.5% increase from the same period during 2021 as major discounts are expected to cut into sales and as some shoppers also choose to return to stores as the Covid-19 pandemic eases.

Discounts for computers could reach as high as 32%, up from 10% in 2021, while price cuts for electronic products overall could hit 27%, up from 8% last year, according to Adobe’s forecast, which is based on data from 85% of the top 100 e-commerce retailers.

Other major potential discounts include toys (22%), televisions (19%), apparel (19%) and appliances (18%). Discounts are expected earlier than usual this year, with price cuts of 15% on average expected as soon as the second week of October, while the largest deals will be offered between Thanksgiving and Cyber Monday, Adobe said.

Major sales days like Black Friday and Thanksgiving are “losing prominence,” Adobe said, noting sales on Thanksgiving day are predicted to fall 1% from the year before, as online shopping becomes a more daily activity for U.S. consumers and as companies offer broader discounts throughout the full holiday season.

Big Number

$590 billion. That’s how much consumers have already spent on total online purchases this year, up 8.9% from the same period the year before, according to Adobe. Online sales have tripled since the pandemic began amid lockdowns and people have turned to e-commerce instead of in-person shopping, according to an analysis from Barrons.

What To Watch For

Adobe predicts the top gifts for this season could include the Nintendo Switch OLED; the Dyson Airwrap Styler; the Apple Watch Series 8/Ultra; AirPods Max/Pro; the PlayStation 5; the Xbox Series X; Stanley Tumblers and gift cards, according to market trends and social media interest.

Key Background

This year’s holiday season comes after consumers have cut back on spending in certain areas as prices have soared for a host of items this year, including groceries, gas and rent. Several major retailers this year were forced to offer big discounts in an effort to get rid of many pandemic-era goods still sitting on shelves, including active and leisure apparel, outdoor furniture and several home products and appliances. Changes in consumer preferences more than two years into the Covid-19 pandemic, supply chain delays and limited discretionary spending are some of the main reasons behind the glut of inventory, leading companies to offer earlier discounts, and potentially cutting into purchases during the holiday season. In 2021, there “wasn’t a lot of product” and so retailers “didn’t need to discount,” Brian Yarbrough, an analyst at Edward Jones, told Bloomberg. “Fast forward to this year and we’re in the exact opposite situation,” he said.

Further Reading

Markdown Mania—TVs, Furniture, Leisure Wear And More—Hits Major Retailers Moving Excess Inventory On Pandemic-Era Goods (Forbes)

Thanksgiving shopping online to decline for first time since 2015 (Axios)

Amazon, Walmart Kick Off Holiday Sales With ‘Massive’ Deals Expected (Bloomberg)