What’s concerning North Bay retailers this holiday season as consumers fret inflation

As the gift-buying season approaches, financial uncertainty is replacing COVID as the main worry for area retailers.

While most retail market watchers expect a modest, single-digit increase in holiday shopping sales revenue in 2022 over 2021, they also believe customers will shop sooner, and see a definite shift in holiday shopping trends and consumer behaviors.

“Higher interest rates mean higher inflation looking toward 2023, as consumers become increasingly cautious,“ said Sonoma State University economist Robert Eyler. “I expect there will be some cutbacks in how much consumers plan to spend, especially when it comes to big-ticket items. Supply-chain issues will impact inventories and revenues unless stores have stocked up in advance.”

Eyler said right now, stores are more concerned about filling hiring vacancies during the peak shopping season, which he expects to pick up by year end.

Large national employers like Amazon and UPS have hiring plans of 100,000 to 150,000 seasonal employees. Adding to the list are Dicks Sporting Goods, 9,000; JCPenney 22,000; Kohl’s, 90,000 (same as 2021); Macy’s 41,000 (down from 76,000 last year); Walmart, 40,000 (down 75% from 150,000 in 2021); Party City, 20,000; Michaels, 15,000 (U.S. and Canada); and Target, 130,000 (100,000 seasonal and 30,000 supply chain).

Consumer uncertainty

“This holiday season consumers may find themselves looking for ways to navigate the inflationary environment — from searching for deals to making trade-offs that allow extra room for their gift-giving budgets,” said Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute.

The consulting firm Deloitte forecasts holiday spending this year will increase by 4% to 6%. That potentially could be $1.45 trillion to $1.47 trillion in sales nationally from November to January. Last year, holiday sales grew by 15.1%, coming off soured sales in the first year of the pandemic.

Deloitte estimates e-commerce sales will grow by 12.8% reaching $260 billion to $264 billion in the fourth quarter, and in-store retail sales are expected to be up 7.9% year over year.

Nearly 3 out of 4 U.S. adults surveyed (74%) say they plan to spend the same amount this year as last, according to SambaTV’s 2022 holiday report conducted in tandem with global research from HarrisX.

On a per-capita basis, Coresight Research anticipates the average adult plans to spend $1,041 this holiday season, and that 83% of millennials plan to spend the same or more this year than last.

Two-thirds of shoppers surveyed expect inflation to impact their holiday gifting budget in the Coresight poll commissioned by GiftNow. However, pollsters found 55% of U.S. gift shoppers expect to spend more than $500 on gifts in 2022, up from 48% in 2021.

Mark Zandi, chief economist with Moody’s Analytics said people bought more online during the pandemic, but now are returning to stores seeking personal shopping experiences.

Staffing issues

For most retailers, finding enough employees to staff multiple shifts and late hours during the holidays continues to be a challenge. National unemployment sits at 3.7%, according to the U.S. Department of Labor in August.

Furthermore, a study by the National Bureau of Economic Research estimates COVID-19 illnesses have reduced the U.S. labor force by approximately 500,000 people, or 0.2% of adults.

Still, some people are looking.

“We found that 14% of the 2,000 U.S. adults surveyed are planning to look for part-time jobs soon, and 28% want to find temp work during the holidays,” said lndeed Flex U.S. General Manager Stacey Lane. “This advance job search trend is especially true this year as rising living costs have millions of Americans considering ways to increase their income.”

She noted that 26% are seeking short-term employment to ‘top up’ their income and 18% want to do temporary work to earn extra money to buy holiday gifts for friends and family.

The area outlook

An informal tour of Santa Rosa’s Coddingtown Mall shops revealed “We’re Hiring” signs in several store windows or inside.

“Finding help has been a struggle. We’re trying to hire for the holidays and have a couple of new full timers, but some people apply, get trained but don’t stay,” JCPenney supervisor Yeimi Leon said.

At Old Navy, manager Nina Susuki said they are looking to hire more employees to manage the anticipated customer surge, but this “requires getting a larger allocation of hours so additional staff can come aboard to handle the rise in foot traffic”.

In downtown Napa at Main and First streets, The Napa Running Company is using signs, Indeed posts, and flyers on Napa Valley College bulletin boards to attract students for seasonal work, according to Assistant Manager Denise Perez.

When calling Marshalls and HomeGoods in Napa, the recorded greeting includes a “we’re hiring” appeal, advising prospective candidates to go to the careers website (jobs.tjx.com) and complete online applications.

“We are currently staffing up mostly with part-time workers and our base continues to grow,” said Bethany Crocetti, TJX corporate communications manager.

The company’s brands also include T.J. Maxx, Sierra and HomeSense.

For some consumers, integrating online ordering with convenient, user-friendly pickup procedures will enhance the fulfillment process and increase satisfaction.

Executive Team Leader Kelley Widmer at the Target store in Coddingtown has witnessed a ramp up in consumer online purchases.

“We’re staffing to meet growing opportunities as we aggressively put things on sale before the holidays and offer easy onsite package delivery with a ‘Drive Up, Quick Pickup’ option for customers at curbside,” Widmer said.

An official at the Walmart store on Lincoln Avenue in Napa who declined to give his full name said, “We want to increase staff in our curbside online pickup team and will start holiday promotions before Black Friday.”

He noted that people are choosy when it comes to work shift preferences and would rather have a Monday–Friday job from 6 a.m. to 3 p.m. than any other days or hours.

“The problem is, Friday through Sunday are our busiest days, and everyone can’t work 8 a.m. to 5 p.m.” he said.

Christmas in July

As shoppers become less worried about COVID as they are about inflation and inventory availability, many firms have accelerated efforts to attract shoppers now — beginning months, not just weeks — before Christmas while also stocking up to avoid inventory shortages in December.

“Most retailers ordered their goods sooner in 2022 (meaning) they will continue to deal with an inventory glut throughout the holiday season,” said Sivakumar Lakshaman, CEO of the AI forecasting and supply chain business unit at Antuit.ai, part of Zebra Technologies. “We expect consumers to shop sooner than usual, which retailers can capitalize upon with early discounting.”

From small independent boutiques to big-box giants, success during this year’s holiday season means stores had to place merchandise orders in spring — seven months before Christmas (or longer) — as a hedge against shipping delays and supply chain shortages. But that could lead to large unsold inventories at year end.

The Costco Wholesale warehouse in Santa Rosa began rolling out a collection of seasonal decorations, cards and accessories in July, before most other retailers, giving their members a head start on gift buying at a time when people are concerned about supplies arriving in time.

Other North Bay Costco warehouses are in Rohnert Park, Fairfield, Novato, Ukiah, Vacaville and Vallejo.

The Issaquah, Washington-based company has 118.9 million cardholding members representing 65.8 million households. It is the sixth-largest retailer in the world and the third biggest in the U.S., behind Walmart and Amazon. It operates an international chain of membership warehouses at 838 locations worldwide, with 578 locations in 46 U.S. states (131 in California) and Puerto Rico as well as in 12 other countries.

Manager Karen Sandoval of Bed and Bathworks in Coddingtown has placed fragrant candles in Pumpkin Pecan Waffle, Winter Forest Balsam and other seasonal scents on shelves simultaneous since July to attract shoppers buying for fall and winter holidays during B&B’s best annual sales period.

This company has “hired to the max” in anticipation of demand, Sandoval said.

The Pendleton store in Corte Madera Town Center is conducting a fall pre-holiday promotion of its own making, called “Soctober” to attract shoppers looking for warm fall footwear while also introducing consumers to the company’s cotton and wool outerwear (with coats and jackets 20% off) for pre-Christmas and winter use.

At The Classic Duck gift shop in Santa Rosa’s Montgomery Village shopping center, three seasonal displays — for Autumn, Halloween and Christmas — were brimming with gift possibilities before Sept. 29.

“Our hottest sellers are clothing, jewelry and handbags followed by unique items for men and women along with books, toys, stuffed animals and clothes for children, and holiday decorations,” said lead supervisor Carrie Knibb.

Senior Sales Associate Carol Bachigmani said, “We offer a lot of style … and a little magic. The key to our 41-year legacy of success in business has been our ability to offer a range of items for people of all ages, while providing customers with a variety of gift ideas, suggestions and advice.”