Yes, we are shopping way more than ever

Nov 26, 2021
Originally published on November 29, 2021 5:42 am

By every forecast and measure possible, this holiday shopping season is slated to be a record-breaker. In fact, this whole year's shopping spree is setting records that not even the Grinch could stop.

How big of a record, exactly?

U.S. shoppers are expected to spend up to $859 billion between this month and next, according to the National Retail Federation. That could be as much as 10.5% more than what was spent during last year's record holiday shopping season.

What's more, the NRF expects a whopper of $4.4 trillion — yes, trillion with a t — to be spent in 2021 altogether. In 2020, our shopping topped out at a mere $4 trillion.

One reason is that this year's holiday gift-buying began earlier than ever, boosting retail spending every month since August. Still, more people told NRF they plan to shop this key holiday weekend than did last year, and Black Friday remains the day that draws the biggest number of shoppers.

People are expected to spend, on average, $785 on holiday gifts, according to market research firm NPD Group.

How good are the deals?

Store discounts won't likely be as deep as in years past. This year has been lucrative, but also expensive for retailers, making them less willing and able to offer blowout sales.

The Great Resignation of retail workers during the pandemic has pushed stores to raise wages faster than they have in years. Amazon, for instance, disclosed that higher pay and other expenses prompted by a lack of workers cost the company $2 billion in the last quarter.

Factory closures and shipping bottlenecks are also costing stores. Gap says it expects to spend $450 million on sending supplies by air instead of through snarled ports. It forecasts up to $650 million in lost sales from the supply-chain disruptions.

What about inflation and higher prices?

We are seeing the sharpest increase in inflation since 1990, according to the Labor Department's data from October. And in surveys, people say this really worries them: Consumer sentiment is at a 10-year low. But then, they keep shopping and paying those higher prices.

This is really unusual; consumer sentiment normally moves in sync with spending. But at least for now, inflation worries have not deterred holiday shoppers.

"I think people are worried, but it's sort of a forward-looking fear," says Akshat Goel, an economist at the data and analytics firm IHS Markit. Goel also points out that so far, some of the biggest price increases have been on food and gas, and those don't typically go on anyone's gift list.

Besides, he adds, this holiday season would set a spending record even when adjusted for inflation. In fact, the spending surge throughout 2021 has been a key reason behind tie-ups at ports and other shipping logjams.

After 2020, a year of canceled trips, postponed weddings and skipped summer camps, many people entered 2021 ready to spend. The federal pandemic aid provided a huge boost to bank accounts, promping holiday levels of spending early in the year.

As NRF Chief Economist Jack Kleinhenz put it, "Consumers are ... spending because they can."

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It is Black Friday. And if you're wondering if this year, we're shopping more than ever before, you are correct. The holiday shopping season is expected to set a new record, despite all the shipping problems, hiring struggles and, of course, the ongoing pandemic. NPR's business correspondent Alina Selyukh is here to tell us more. And I'm very happy to be joining the annual tradition of asking you the same question - is Black Friday still a thing? So is it still a thing?

ALINA SELYUKH, BYLINE: It depends on what you mean by that. If you mean people lining up in tents outside of a local Best Buy at dawn, maybe not so much. People shopping like crazy is definitely still a thing. The National Retail Federation says Black Friday is still the day when the most number of people shop, even more than on Cyber Monday. Although, of course, both of them are huge for online shopping.

But let's be real - Black Friday sales have been going on for months. What is it - October, September, maybe this summer. I talked to Katerina Grant (ph) from Maryland, who says she bought almost all her gifts on summer sales - Legos for her 7-year-old son and Barbie toys for her 4-year-old daughter.

KATERINA GRANT: We bought the huge Barbie Dream House. The price is more expensive now than when I got it at Costco randomly in, I think, maybe August. So I don't know. The price is more expensive or the same by, like, 20 bucks.

SELYUKH: She shopped early, and she has no regrets.

MARTINEZ: No, why would - I want to keep my sneaker shelf fresh, so why not? So how good are the deals this year?

SELYUKH: I mean, they are there. Adobe tracks online shopping. And that group says it's been roughly 20% off toys, 15% off clothes, 13% off computers. They are predicting best deals today on furniture, tools and home goods and a bit better deals on electronics and appliances tomorrow on Saturday and then TVs on Cyber Monday.

But overall, this year's holiday discounts indeed are not expected to be as good as maybe we've seen in years past - sort of what Grant noticed. You mentioned the shipping mess, the hiring issues. Both of those are costing retailers a pretty penny, billions of dollars. So this year, they're not really willing and able to offer those super generous blowout sales like we might have seen in the past.

MARTINEZ: And then on top of that, inflation has kicked in at the highest level since 1990 as of last month. So why aren't higher prices maybe deterring holiday shoppers?

SELYUKH: This is a peculiar thing. In surveys, people say they're really worried about inflation. So-called consumer sentiment is actually at a decade low. But then people also keep buying stuff, you know, paying those higher prices. Spending and sentiment, sort of how we feel and what we actually do - normally, they go hand in hand, in sync, but not this year.

Adobe says on Thanksgiving Day, just online, shoppers were spending $3 1/2 million a minute, a minute. So as far as inflation worries, maybe people are more worried about the future rather than the now. And it's also worth pointing out some of the biggest price jumps have been for food and gas, which are not really the kind of thing you buy as a holiday gift.

MARTINEZ: And how will people know that I love them unless I spend on them? I mean, that's the whole point, right? Now - OK, so...

SELYUKH: And how would you put gas in a stocking...

MARTINEZ: Right, impossible.

SELYUKH: ...I suppose?

MARTINEZ: It smells. Now, when we talk about record shopping, are we spending more simply because just things are more expensive?

SELYUKH: No. I mean, it's definitely part of it. But economists I've talked to say we are looking at a record, even if all the numbers were adjusted for inflation. It's really hard to overstate just how much shopping people have been doing all year long. That's kind of at the heart of most of the challenges we've been hearing about this year - the logjams in ports, the overwhelmed warehouses, overrun trucks, the shipping delays. As early as the spring, we were buying so much that it was like holiday shopping levels of stuff. And that's because all that sitting at home last year plus federal aid gave people lots of cash. Here's economist Tim Quinlan from Wells Fargo.

TIM QUINLAN: Think of the vacations that have been canceled, the weddings that have been put off, the kids that didn't go to camp. And that leads to this excess savings that's kind of found its way into mostly goods spending.

SELYUKH: And that's how we're looking at a holiday gift buying season of $850 billion. That's possibly as much as 10% more than last year, which already was the biggest year of all. So at this point, even the Grinch couldn't stop 2021 from becoming a massive, record-breaking shopping year.

MARTINEZ: Yeah, not a chance. That's NPR's business correspondent Alina Selyukh. Thanks a lot.

SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.