Online sales rose 3.5%, boosted by discounts
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According to Adobe Analytics, online sales during the holiday season grew 3.5% year over year to $211.7 billion as record-high discounts prompted shoppers to open their wallets.
That spending marked a new peak for e-commerce sales during the pivotal retail season, according to Adobe.
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Nevertheless, price discounts played a key role in the turnover of goods. Total spending got a boost from major shopping holidays, which usually bring the biggest discounts. Online sales during Cyber Week, the five-day period from Thanksgiving to Cyber Monday, totaled about $35.3 billion.
Vivek Pandya, senior analyst at Adobe Digital Insights, said the script has changed from last year. Shoppers were willing to pay more for holiday shopping in 2021 as retailers ran out of produce. Now, he said, buyers have become more frugal and will hold out at a lower price.
“Retailers really need to adapt to consumer conditions now,” he said. “They’re in a very different position than they were during the pandemic, when it was all about the consumer trying to get goods as quickly as possible and retailers were really in the driver’s seat.”
The latest holiday numbers come as retailers brace for a tougher year and see signs some consumers may be running out of gas. As inflation remains high, Americans are increasing their credit card balances and putting less money in savings accounts. Sales of some high-end items, such as jewelry and consumer electronics, have declined. And retailers have reduced merchandise and scaled back orders to shed excess inventory and prepare for a potential recession.
In particular, food and housing costs have skyrocketed, taking up a larger chunk of Americans’ budgets. Inflation rose less-than-expected in November but was still 7.1% higher than a year earlier, according to the Labor Department.
Online retailers have been enticing price-sensitive customers to hit the “buy” button with plenty of promotions. According to Adobe, prices on major retailers’ websites fell during the holiday season and discount tiers were higher than ever.
Toy discounts peaked during the holiday season at 34% off list price, up from 19% in the same period last year. Electronics discounts peaked at 25%, up from 8% in the same period last year. And apparel peaked at 19%, up from 13% a year ago.
Computers, televisions, electronic devices and sporting goods were also higher sales, according to Adobe.
According to Adobe’s Digital Price Index, which tracks e-commerce prices in 18 categories, online prices have fallen year on year since September. This means that the 3.5% rise was driven by net new demand and not inflated prices.
Pandya said the deep discounts likely helped retailers sell the flood of goods that had been piling up in stores’ warehouses and back rooms. Many retailers including Goal, Walmart and cabbagefaced a surge in inventories as popular categories fell out of favor from the Covid pandemic and inflation weighed on household budgets.
In a separate report covering in-store spending, holiday sales in stores and online rose 7.6% from November 1 to December 24, according to data from Mastercard SpendingPulse. The number includes all forms of payment and restaurant expenses. It is not adjusted for inflation.
Online sales have become a more important part of holiday spending due to the pandemic, but most sales are still in stores.
E-commerce accounted for 21.6% of total retail sales this year over the holidays, according to Mastercard SpendingPulse. This is a slight increase from the 2021 and 2020 holidays, when e-commerce accounted for 20.9% and 20.6% of total sales, respectively, but a notable jump from the same period in 2019, when it accounted for 14.6% of the total sales.