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Retail Watch: Strong Online Holiday Sales Forecast, but Margins at Risk from Heavy Discounting

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Happy family shopping online for Christmas

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Adobe, the leading software company, has released its online shopping forecast for the upcoming holiday season. This report is based on a thorough analysis of online commerce transactions, covering over 1 trillion visits to U.S. retail sites, 100 million SKUs, and 18 product categories.

According to Adobe’s forecast, U.S. online holiday sales are expected to grow by 4.8% year-over-year to reach $221.8 billion. This represents an acceleration from the 3.5% growth seen in the previous year. The report highlights that never-before-seen discounts and the increased usage of flexible spending methods like Buy Now, Pay Later will be instrumental in driving online spending this season, as consumers aim to stretch their budgets. Furthermore, mobile shopping is predicted to surpass desktop usage, accounting for more than half (51.2%) of all online spending.

The Cyber Week period, which includes Thanksgiving, Black Friday, and Cyber Monday, is particularly significant in terms of online sales growth. Adobe forecasts a 5.4% increase in sales during this period, with Cyber Monday expected to be the biggest shopping day of the season, generating a record-breaking $12 billion in spending.

β€œDespite an unpredictable economic environment, where consumers face several challenges including rising interest rates, we expect strong e-commerce growth this season on account of record discounts and flexible payment methods,” said Adobe executive Patrick Brown.

The report also emphasizes that retailers will offer record-high discounts this holiday season due to the uncertain spending environment and rising costs in areas such as food and gas. Among the 18 categories tracked by Adobe, toys, electronics, and apparel are expected to have the most significant deals. Other categories with notable discounts include sporting goods, TVs, and furniture/bedding.

It’s important to note that the official tracking period for the holiday season is from November 1 to December 31. This means that major events like Amazon’s Prime Deal Big Deal Days and overlapping promotions from retailers such as Walmart, Target, and Best Buy are not included in Adobe’s forecast. However, online retailers like Etsy and Wayfair have already announced their plans to kick off holiday sales early.

Frequently Asked Questions

  • What is the forecast for U.S. online holiday sales this year?
  • What factors are expected to drive online spending during the holiday season?
  • Which categories are likely to offer the biggest discounts?
  • What is the significance of the Cyber Week period in terms of online sales?
  • When is the official tracking period for the holiday season?

Pros and Cons of Online Holiday Shopping

Pros

  • Access to a wide range of products and options
  • Convenience of shopping from anywhere at any time
  • Potential for significant discounts and deals
  • Ability to compare prices and read reviews before making a purchase
  • Reduced stress and crowds compared to in-store shopping

Cons

  • Potential for slower or delayed deliveries
  • Difficulty in assessing product quality without physical inspection
  • Possibility of online scams or fraud
  • Lack of personal assistance and in-store experiences
  • Cannot try out or test products before buying

Overall, the forecast for online holiday sales is promising, with expected growth and record discounts. However, it’s crucial for retailers to manage their margins effectively amidst heavy discounting. Investors and shoppers alike should keep an eye on these trends and consider the pros and cons of online shopping during the holiday season.

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