As the holiday shopping season approaches, retail experts in the United States are bracing for a challenging time. Despite aggressive discounting, consumer confidence has waned due to economic uncertainty driven by rising inflation and interest rate increases..
The National Retail Federation (NRF), the largest retail trade association in the world, has forecasted a moderate growth of 6% to 8% in holiday sales compared to last year’s record-breaking season. However, this projection is below the 8.5% average growth rate seen over the past five years..
Several factors contribute to the cautious outlook for the holiday season. Inflation remains stubbornly high, with the Consumer Price Index (CPI) rising 8.2% year-over-year in September, the highest increase since 1981. This surge has eroded consumers’ purchasing power, forcing them to prioritize essential items over discretionary purchases..
In addition to inflation, rising interest rates are also dampening consumer spending. The Federal Reserve has raised its benchmark interest rate several times this year in an effort to combat inflation. As a result, borrowing costs have increased, making it more expensive for consumers to take out loans and make purchases..
Furthermore, ongoing supply chain issues and labor shortages are adding to retailers’ challenges. Product availability remains constrained due to disruptions caused by the COVID-19 pandemic, leading to higher prices and longer lead times. Additionally, retailers are struggling to find and retain workers, which could lead to service disruptions and longer checkout lines during the busy holiday shopping season..
To entice shoppers, retailers are offering deep discounts and promotions. Macy’s, for example, is launching a .
