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).
“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.
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.