Adobe’s October ecommerce report, released today, could be an early indicator of how the holiday season will play out this year.
Consumers spent $72.2 billion online in October, a hair less than the $72.4 billion spent in October 2021. Adobe
Adobe also noted that, on a month-over-month basis, consumers spent 10.9% more this October than they did in September.
“Despite inflationary pressures and the rising cost of borrowing, there was not a material decline this year in early holiday shopping,” Taylor Schreiner, senior director, Adobe Digital Insights, said in releasing the report.
The October figures show ecommerce demand remains “durable and resilient, in spite of a challenging macroeconomic environment,” Schreiner said.
Year-to-date, consumers have spent $727 billion online, according to Adobe, up 6.9% compared to the January to October period in 2021.
Adobe last month, in its holiday forecast, had predicted we would see the weakest, “most anemic” growth in online sales this holiday season, compared to the past seven years. Adobe predicted that online sales in November and December would grow by 2.5%, well below the 8.6% holiday growth in 2021 and the record pandemic-fueled online holiday sales spike of 32.2% in 2020.
While Adobe is emphasizing the fact that October sales nearly matched last year’s robust levels, in retail any decline in year-over-year spending – even by as little as 0.2% – is worrying, because of the typical pattern of retail sales increasing year-over-year, in better times and worse times.
As tracked by the National Retail Federation, overall holiday retail sales – online and offline – have declined only once in the past 20 years, and that was in the Great Recession year of 2008, when they fell 4.7%. Every other year, and typically every year in previous decades as well, retail sales increased. Sometimes the gain was slight, sometimes it was robust, but there typically was a gain.
October numbers aren’t included in the November and December holiday growth rates, but October often signals what retailers can expect during the final two months of the year.
Retail optimists vs. retail pessimists
The Adobe ecommerce numbers for October can be viewed through either a pessimistic, or an optimistic lens.
The pessimistic take is that the flat spending is a warning sign that all those surveys predicting that consumers will curb their spending due to inflation are correct. They show, retail pessimists can argue, that despite heavy discounting and promotions in October, many consumers weren’t convinced to spend.
Retail optimists can view the numbers as proof of two upbeat narratives for this holiday season. One is that retailers expect that consumers will return to more typical shopping patterns, in other words they will do more spending in November and December, leave more purchases to the last minute, not be as worried about supply chain issues, and thus will be less likely to shop early.
The other narrative is that this will be the year shoppers return to stores, and spend less time shopping online than they did during the 2020 and 2021 pandemic years.
Optimistic retailers and forecasters are expecting late shopping and in-store shopping to drive sales upward this holiday season. The National Retail Federation is predicting overall sales will grow by 6 to 8% in November and December, to over $942 billion.
The ICSC, the trade group representing malls and shopping centers, expects holiday growth of 6.7%, and Deloitte has forecast growth of between 4% and 6%.
Adobe reported that steep discounts, particularly in electronics and toys, drove sales in October. Electronics discounts during the month were was high as 17%, and toy discounts reached 15%. Adobe said it expects the heaviest discounting to occur during Cyber Week, the period from Thanksgiving to Cyber Monday.
Top selling toys in October, according to Adobe, were Squishmallows, Roblox figures, Pokemon cards, and LOL Surprise dolls. Top selling electronics and gaming devices were Playstation 5, Xbox Series 5, Nintendo Switch, and Apple phones, watches, and AirPods.