Vivek Pandiya makes a living by watching online spending.
He is the principal analyst for Adobe Digital Insights, which tracks online spending in the United States and elsewhere.
Online spending is growing, but the how and even why of spending is evolving, he says.
In the first four months of 2024, spending increased 7%, to $336 billion, compared to the previous year. More than half of spending is now done through a mobile device, and Adobe Analytics expects that 52.5% of holiday shopping in 2024 will be made via mobile.
Related: amazon makes a major Prime Day announcement
There are three trends that Adobe and Pandya see in retail.
- Consumers, tired of the inflationary pressures that emerged in the wake of the Covid-19 pandemic, are trading down and happy to do so.
- Electronics remains the largest category, followed by apparel, but groceries now make up more than 10% of online spending.
- Various online moments throughout the year have become cultural magnets.
The first trend makes sense. Recall that the consumer price index in June 2022 rose 9.1% from a year ago, forcing the Federal Reserve to raise interest rates to curb price pressure.
The hunt for value
This is how Adobe sees it. Since 2019, the company has tracked online sales data from retailers large and small and divides sales into 18 categories.
Each one, in turn, is divided into four subcategories according to price.
Data shows that shoppers across all demographics are increasingly likely to buy on price. If the price of a product increases too quickly in one place, the customer may go somewhere else.
There isn't much difference between the motivations of wealthy buyers and less wealthy buyers, Pandya said.
“They buy and get value whenever they can,” he said in an interview.
This trend has become increasingly intense, Pandya said, in part due to inflation and economic uncertainty.
amazon Prime Day creates an event
Also adding to the intensity is amazon.com's annual Prime Day sale that has been launched in early July since 2015.
The two-day Prime Day extravaganza attracts a lot of media attention, especially because of the sales amazon generates: some $12.7 billion in sales in the United States alone during the 2023 event.
amazon holds Prime Day sales in other countries.
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Last year, these included Austria, Australia, Belgium, Brazil, Canada, China, France, Germany, Italy, Japan, Luxembourg, Mexico, Netherlands, Portugal, Saudi Arabia, Singapore, Spain, United Kingdom, Sweden and Poland .
More importantly, it forces almost every retailer to adjust what they do, whether it's Walmart (WMT) Aim (TGT) Nordstrom (JWN) or the local appliance store.
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The result: Prime Day is now the main anchor of a mammoth sales season that extends through much of July, when retailers sense that shoppers are ready to use their credit cards.
Meanwhile, consumers are interested in deals because, as Pandya points out, they have become increasingly price-sensitive. And now they're more willing to hit the buy buttons on their phones and pay later.
And at the most basic level, some buyers simply want to tell you about the steal they got at the sale.
And so retailers offer as many deals as they can: electronics, shoes, headphones, clothing, books, appliances.
The sales have another benefit: They help retailers clear out old inventory and prepare them for what Pandya says is the next big retail cultural event: the holidays.
The next big things start in late fall.
Back-to-school season, which begins in August, isn't exactly a fun-filled cultural event.
However, the holiday shopping season is getting longer. You know it's started if you start seeing Christmas decorations at a Costco Wholesale (COST) save it some time after Labor Day.
The big action peaks between the day after Thanksgiving (aka Black Friday) and the following Monday (aka Cyber Monday).
The idea of big seasonal sales is not new. Stores in many countries hold big sales in January after the holidays to empty their shelves.
Paris department stores work a month-long offer, les sales d'été, every summer. (The first version of the sale has been around since the beginning of the 19th century.)
You can buy designer clothes, perfumes, shoes, home furnishings, the game Monopoly in different languages, and if you're lucky, a Louisiana State University baseball cap.
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