Inflation Has A Role In Record Online Sales Of $204 Billion Over The Holidays

Online sales during the holiday season rose nearly 9% to a record $204.5 billion, Adobe Analytics said Wednesday, as consumers opened up their wallets to spend on gifts for family, friends, and for themselves.

But the uptick in sales was driven, in part, by higher prices on goods from apparel to groceries to appliances, said Adobe, which analyzes 1 trillion visits to retailers’ websites.

Online prices increased 3.1% in December compared with the prior year and rose 0.8% month over month. That marked the 20th consecutive month of online inflation on a year-over-year basis, and followed a record year-over-year spike in prices of 3.5% in November, Adobe said.

“It’s definitely a key contributor to the growth but it’s not the totality of the growth,” said Vivek Pandya, lead analyst at Adobe Digital Insights, about the continued inflation. “There’s a level of just innate growth happening in overall retail sales … and we’re viewing the inflation as one of the explanatory factors.”

Consumers have also been purchasing more expensive items, such as jewelry, which he believes is contributing to the increase in retail sales.

And sales may have been even greater if customers hadn’t discovered so many things were out of stock on the internet. Retailers have been dealing with supply chain issues in recent months, causing item shipments to be delayed on important shopping days. Companies are also wrestling with how to deal with a new wave of Covid cases in the United States, spurred by the highly contagious omicron version, which has sickened and laid off many of their employees.

Due to some of these limits, apparel giants Lululemon and Abercrombie & Fitch stated this week that their fiscal fourth-quarter sales will be lower than originally forecast. Urban Outfitters claimed it struggled to have a diverse range of home goods in store, but that it could ship clothing from overseas via air freight.

During the holiday season, which spans from November 1 to December 31, consumers viewed more than 6 billion out-of-stock warnings on retailer websites, according to Adobe. According to Adobe, this is up 10% from last year’s figures and up 253 percent from the 2019 Christmas season.

Nonetheless, the out-of-stock warnings may have just directed customers to other stores’ websites in quest of desired items.

“The thing about online is you have a bit more flexibility in choice, where if an item it out of stock on one site, you can open up another window browser and look at another site,” said Pandya.

Due to persisting supply chain challenges, retailers’ holiday stocks decreased 2% compared to 2020 levels, according to a separate Salesforce report.

Discounts were mostly absent this holiday season, as merchants faced rising prices on everything from transportation to labor, and inventory levels were reduced in many categories. Electronics were marked down by an average of 8% in 2018, compared to 21 per cent in 2020, according to Adobe. Sporting products were discounted by 6 per cent this year, compared to 14 per cent last year. However, there were more promotions for clothes and toys.

(Adapted from Forbes.com)

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