The Christmas shopping season is no longer confined to December. In recent years, it has expanded into October. Now, another trend is emerging – back-to-school shopping starting as early as the week after the Fourth of July. This shift in consumer behavior can be attributed to events like Prime Day, hosted by Amazon, and competing sales organized by other retailers.
Prime Day, which falls on July 11 and 12 this year, marks the first major shopping event of 2023. It serves as an important indicator of how consumers are faring after a challenging start to the year.
Major retailers have strategically scheduled their own sales around Prime Day. For instance, Walmart is running Walmart Plus Week from July 10 to July 13. Target’s Circle Week begins on July 9 and extends until July 15. Additionally, Best Buy’s Black Friday in July event spans from July 10 to July 12.
This year, many retailers reported a decrease in earnings as Americans held back from discretionary purchases. In particular, high-priced items that would require financing at higher interest rates were being avoided or delayed due to inflationary pressures that squeezed household budgets.
Placer.ai, an analytics firm, provides further evidence of this trend by analyzing foot-traffic data. Their research shows that visits to major retail chains across the country have been lower during the current year in comparison to both the previous year and the time before the pandemic.
The early start of back-to-school shopping and the success of Prime Day will give valuable insights into consumer spending habits and provide an indication of how well the retail industry can recover from recent challenges.
The Changing Landscape of Retail in 2023
The year 2023 has proved to be an interesting one for retailers, as foot traffic patterns continue to shift. While certain holidays, like Valentine’s Day, Easter, and Mother’s and Father’s Day, still see an uptick in visitor numbers, other events, such as Memorial Day, have seen a more subdued increase.
According to data from Placer.ai, however, there is reason for optimism. As the year progresses, the gap between 2023 and 2022 visits has been steadily narrowing. This means that the number of shoppers visiting stores is gradually returning to pre-pandemic levels, despite a significant drop at the beginning of the year. This trend aligns with recent data on inflation, which although still high, appears to be cooling off.
Nevertheless, consumers remain cautious about their spending habits. With the cost of essentials skyrocketing, people are becoming more discerning when it comes to discretionary purchases. Placer.ai’s research has found that the beauty and self-care sector is the only one out of nine categories to experience a positive year-over-year increase in weekly visits over the past seven weeks. On the other hand, visits to pet stores, office supplies, and home-improvement retailers have remained around 8% lower than they were in 2022.
Retailers anticipate boost in sales
The upcoming sale week is expected to bring a significant boost in sales for major retail players like Amazon, Best Buy, Walmart, and Target. Best Buy, in particular, is projected to see a surge in traffic as their recent Father’s Day sale indicated that shoppers are receptive to their promotions. Walmart also shows promising foot-traffic trends, which bodes well for their Walmart Plus Week sale. Although Target’s recent growth has been moderate, their Circle Week could still drive traffic.
Given the financial constraints that many shoppers are facing, they are likely to seize any opportunity to stretch their buying power. Various retailers have already ramped up their discounts this year to attract budget-savvy customers.
Amazon, for instance, announced in a press release that they will be offering more deals than ever before for their Prime Day event.
Despite recent improvements, retail visits remain below last year’s levels. This can be attributed to the slow decline in inflation, which has posed challenges for many financially-strained Americans. However, with inflation moving in the right direction and shoppers responding positively to promotions, the upcoming sale week could bring retailers close to experiencing a Christmas-like boost in July.
