As the holiday season approaches, a significant shift is evident among US retailers regarding their inventory strategies. Data shows that imports of holiday products, including popular items such as Christmas trees, toys, and decorations, have markedly decreased this year. Major retailers, notably Walmart, are importing considerably less than in previous seasons, reflecting a cautious approach in the face of expected slower sales during this festive period.
Walmart, recognized as the largest retailer in the world, has reported a substantial reduction in Christmas imports, bringing in roughly 340,000 kilos of products classified as “Christmas” goods in the twelve months ending September 30, 2024. This is a dramatic decline from almost three times that amount—approximately 980,000 kilos—during the same period in 2023. Furthermore, in 2022, Walmart imported over 1.9 million kilos of Christmas products, underscoring a notable downward trend.
This strategic cutback can be attributed to the retailer’s thorough analysis of consumer behavior and spending patterns. According to Charles Sizemore, chief investment officer at Sizemore Capital Management, Walmart’s extensive research has led them to conclude that this year’s holiday season is unlikely to be strong. For retailers, understanding consumer preferences is key, and the data indicates a significant shift in shopping habits.
It’s important to note that these import statistics primarily reflect items explicitly categorized as holiday products, such as decorations and toys. The decline in imports raises concerns about overall sales expectations. Retail consultant Gerald Storch highlights that many retailers are projecting smaller increases in sales growth compared to the previous year. Stochastic analysis, aligned with consumer trends, reinforces the notion that consumers are facing budgetary constraints, leaving them with less disposable income for festive shopping.
Despite a recent boost in overall US retail sales—indicating steady economic growth—experts suggest that spending patterns reveal a different story. DA Davidson analyst Linda Bolton Weiser emphasized that the consumer landscape is far from robust and that the average price point for toys at Walmart has decreased by 10% compared to last year. This indicates a conscious effort by consumers to seek value amid tighter budgets.
Overall, US retailers have collectively imported approximately the same weight of Christmas-related products this year compared to 2023. However, when juxtaposed with 2022, they have imported at least 20% less, according to information from ImportYeti. This year’s total imports reached about 141 million kilos, down from around 180 million kilos total during the same period in 2022, a stark 22% reduction.
Predicting the future of holiday spending remains a challenge. The National Retail Federation, which is also chaired by Walmart’s top US executive, John Furner, projects that holiday spending growth for the last two months of the year will hover between 2.5% and 3.5% compared to the previous year. This anticipated growth rate represents the slowest rise since 2018, when holiday sales registered a mere 1.8% increase. In tandem with sales projections, hiring for seasonal positions is also expected to be lower this year, with retailers planning to bring on around 520,000 temporary workers, compared to 564,200 last year.
Planning for Christmas imports typically begins months in advance, with merchandise arriving in the U.S. steadily throughout the year. However, major retailers like Walmart are making concerted efforts to avoid the pitfalls of previous years, where excess inventory became a significant liability. Analysts like Dana Telsey from Telsey Advisory Group emphasize the importance of maintaining lean inventories, which helps retailers avoid the financial burden of discounting leftover stock.
Craig Johnson, a president of retail consultancy Customer Growth Partners, advises that conclusions regarding the season’s performance shouldn’t be hastily drawn from import data alone. While fewer imports may suggest lackluster sales, they do not necessarily translate directly into lower holiday sales. In fact, some analysts forecast an uptick in holiday sales, estimating a 4% increase for this year, albeit at a slower pace than the 4.1% rise seen in 2023.
As the holiday shopping season gets underway, it’s crucial for retailers to adapt their strategies to the current economic landscape. Understanding consumer behavior, optimizing inventory levels, and adjusting pricing strategies will be paramount in navigating this challenging season.
