There’s A Good Chance You Won’t Get All You Want For Christmas

Retailers were burned during the pandemic when they didn’t have what stuck-at-home consumers were looking for. Couches, bread flour, bicycles and many other things soared in demand and retailers’ shelves emptied out faster than they could replenish.

As the pandemic wore on, merchants adjusted but they never got ahead of consumers’ changing tastes. They repeatedly boomeranged, either stocked out or caught with an oversupply.

It has come around again. Now retailers are over-inventoried with high-end goods for Christmas and they are anxious.

Major retailers are avoiding commitments to high-end items and cutting existing orders. I have heard from wholesalers who say they have been paid by major retailers to keep their inventory and sell it elsewhere instead of delivering it.

That means the most desirable high-end items are likely to be in short supply for holiday shopping this year.

How The Market Breaks Down

The data on consumer sentiment reveals a break point between households earning above $100 thousand and those earning below. The wealthier group (about 34% of households) is much less worried about their economic outlook than the below-$100k cohort (about 66% of households).

The less wealthy group is worried and they are spending less.

Steve Sadove, former Chair of the National Retail Federation and former Chairman and CEO of Saks Fifth Avenue and an advisor to MastercardMA
, says “the consumer is clearly weakening, especially at the mid to lower end.”

Below $100k consumers are likely to be shopping by price. The indications I get are that they will find the inventory they’re looking for, retailers are well stocked with attractively priced, non-luxury items for holiday.

But the market for luxury products has been strong, the supply is not deep and retailers are cutting orders every day. Sadove told me, “the high end is holding up well and some of those retailers will have cut inventory.”

What It Means For Consumers

If you’re shopping for basic products like sweaters or garments you wear every day as gifts for the holidays, there’s a good chance you’ll find what you want. There should be bargains galore for holiday gifts and markdowns after Christmas.

But if you’re looking for luxury items, stop reading this article right now and start shopping. If you wait, there’s a good chance that what you want will be sold out.

Holiday shopping keeps starting earlier every year. The pandemic shift to online holiday shopping meant allowing for delivery times and that accelereated the early start. With October here, now is the time to shop if you want to avoid disappointment for the holidays.

Pandemic effects have gone on longer than anyone anticipated and retailers often overreact to the most recent trends. With many retailers being caught with too much inventory this year, inventories are being reduced drastically and that may create disappointmented customers.

Until consumer behavivor estblishes consistent post-pandemic patterns, it’s likely for the pendulum to keep swinging and retailers to keep cycling from oversupply to shortage. For now, if you want great gifts for holiday, better get shopping.