The Loadstar: US 'annual shopping orgy' sees record sales as retailers heavily discount

The increase in sales came as no surprise to Rick Watson, founder and CEO of e-commerce consultant RMW Commerce Consulting. For certain items, such as TV sets, American consumers usually wait for this time of the year when discounts are most attractive, he pointed out.

Deep discounts played a major role in the rise to record sales this year, as did the broad availability of merchandise, compared with last year when many goods were stuck in transit thanks to supply chain disruptions, he noted.

Merchants have been aggressive in their discounting this year, with electronics as much as 25% lower and toys sold at an average discount of 34%. In part, this was due to efforts to whittle down excessive inventory and partly to secure sales early in the season, out of fear that consumer demand might run out of steam.

And the sales orgy, while beating forecasts and last year’s volume, has not been a stellar success, said Mr Watson. The increase in sales came off higher inventory levels and steeper discounts, which means sales have overall been less profitable than a year ago, he explained, and added: “It doesn’t say much about the whole season.”

Merchants and their providers are faced with the nagging question of how peak season business will fare from here to Christmas. There have been warnings that momentum will slow, resulting in a flat performance overall for the 2022 peak season. FedEx informed contractors for its Ground service at the end of October to brace themselves for a lower peak season volume.

Mr Watson is pondering the ramifications of the past few days for next year. With margins shrunk from a year earlier while costs have increased, plus financing used for inventory more expensive, merchants may be ordering less, he thinks.

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