Consumers remained a pillar of support for the economy despite the high interest-rate environment that has prevailed since early 2022. With the Federal Reserve implementing a substantial 50 basis-point rate cut, the benefits of which are expected to trickle down to them, consumers are forecasted to splurge on purchases this holiday season, according to early forecasts provided by Adobe on Wednesday.
Vibrant Spending: Consumer E-commerce spending will likely reach a record $240.8 billion from Nov. 1 to Dec. 31, Adobe said. This included spending online, discounting, ‘Buy Now, Pay Later,’ mobile shopping and more, it said. The forecast would mean an 8.4% year-over-year increase from the $221.8 billion spent in 2023, which saw a more modest 4.9% growth.
Electronics, apparel and furniture/home goods will account for the bulk of the spending. The firm’s analytics show spending on Black Friday – the Friday that follows the Thanksgiving Thursday, and Thanksgiving day will grow 9.9% and 8.7%, respectively. Cyber Monday online spending is expected to be up a more modest 6.1%.
Adobe expects discounts to peak at 30% this season, and drive over $2 billion in incremental online spending for retailers. The firm also said consumers will likely trade up to more expensive goods this season as opposed to the trend seen in recent months. Expensive goods will likely make up 19% of the share of the total online spending. In electronics, the share will likely be a steeper 58%.
Mobile shopping could make up 53.2% of total online spending and spending through BNPL could see another record this time. BNPL sales are expected to rise 11.4% to $18.5 billion, over 75% of this driven by mobile purchases.
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Best Time To Buy: This time around, discounts would be more spread out, with deals starting in October itself, Adobe said, adding that goods could trade up to 16% off the listed price in October. The discount could go up to 18% in November before the Cyber Week.
Hot Sellers: Among the most sought-after items are:
- Bluey Ultimate Lights
- Sounds Playhouse
- Slime Kits
- Sony Group Corp.’s SNE PlayStation 5
- Madden NFL 25
- Apple, Inc.’s AAPL iPhone 16
- ice cream maker Ninja Creami
Stock Implications: With most spending likely happening online, those retailers having a strong online presence could be the ones to benefit the most. Pureplay electronics retailers such as Best Buy, Inc. BBY, Apple and Sony, e-commerce giant Amazon, Inc. AMZN and retailers such as Walmart, Inc. WMT and Costco Wholesale Corp. COST could also be preferred destination for buying consumer electronics goods.
Madden NFL 25 is an American football video game developed by Electronic Arts Inc. EA Orlando and published by EA Sports. It could be bought on EA’s website, Amazon, or any other video game retailer.
BNPL stocks such as Affirm Holdings, Inc. AFRM, Block, Inc. SQ, and PayPal, Inc. PYPL could reap the benefit of rising interest in purchases via the BNPL route.
The Commerce Department’s retail sales report for August released earlier this month showed an unexpected increase as weak auto & auto parts sales were more than offset by strength in online sales, underlining the underlying strength.
The SPDR S&P Retail ETF XRT ended Tuesday’s session up 0.80% at $77.13 but it has lost about 0.8% for the year even as the broader market hovers at a record high. The Fed rate cuts – the one announced and the two more anticipated before the year-end, and the seasonally strong holiday season could bring these stocks back to favor in the near term.
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