Retailers nonetheless forecast record-breaking holiday sales
By Anne D’Innocenzio
AP Retail Writer
NEW YORK (AP) — Emarilis Velazquez is paying higher prices on everything from food to clothing.
Her monthly grocery bill has ballooned from $650 to almost $850 in recent months. To save money, she looks for less expensive cuts of meat and has switched to a cheaper detergent. She also clips coupons and shops for her kids’ clothing at thrift stores instead of Children’s Place.
For the holidays, she’s scaling back on gifts. She plans to spend $600 on her three young children instead of $1,000, and she won’t be buying any gifts for relatives.
“It’s stressful,” said the 33-year-old stay-at-home mother from Boardman, Ohio, whose husband earns $30,000 a year making pallets for stores. “You want to give it all to your kids, even though (Christmas) is about family. They still expect things. It is hard that you can’t give them what they ask for.”
Retailers may be forecasting record-breaking sales for the holiday shopping season, but low-income customers are struggling as they bear the brunt of the highest inflation in 39 years.
The government’s report last week that consumer prices jumped 6.8% over the past year showed that some of the largest cost spikes have been for such necessities as food, energy, housing, autos and clothing.
Overall, rising prices are changing shopping habits for many Americans. For some, they’re a mere inconvenience, pushing them to delay building a deck on their house amid higher lumber prices. But for lower-income households with little or no cash cushions, they’re making harder choices such as whether they can put food on the table or if they’ll have to drastically scale back on holiday presents for their children — or forgo them completely.
“Inflation is devastating the pocketbooks of low-income households,” said C. Britt Beemer, chairman of the America’s Research Group, estimating that low-income households are cutting back their holiday buying by 20% from a year ago. “They are going to have to decide what they are going to buy and what they’re going to eat.”
Even some retailers that built their businesses around the allure of ultra-low prices have begun boosting them. Dollar Tree — the last true dollar store — is increasing its prices to $1.25 for a majority of its products because of higher costs of goods and freight. Velazquez says that 25 cents extra per item adds up, and the increase will force her to scale back on impulse buying there.
Despite the inflation pressures — as well as supply chain disruptions and the new COVID-19 omicron variant — the National Retail Federation says this year’s holiday shopping season appears to be on track to exceed its sales growth forecast of between 8.5% and 10.5%.
According to a poll by The Associated Press-NORC Center for Public Affairs Research, about three-quarters of Americans say they will be giving gifts to friends and family to celebrate the winter holidays this year. But the rising costs have not gone unnoticed. About 6 in 10 Americans say holiday gift prices are higher than usual, while only 2 in 10 say they are not. Roughly 2 in 10 say they did not purchase gifts recently.
Overall, 4 in 10 Americans say it has been harder to afford the things they want to give as gifts this year. Roughly half say it’s neither easier nor harder, while few say it has been easier.
But people in lower income groups are feeling the cost pressures most acutely.
Forty-five percent of Americans in households earning less than $50,000 annually and 40% in households earning between $50,000 and $100,000 say it has been harder to afford gifts this year, compared with 30% in higher income households.
“It was hard enough a year ago, five years ago, for lower-income families to find extra money to buy gifts. But it is that much harder now,” said Ted Rossman, senior industry analyst at CreditCards. com, whose survey in October found a significant number of low-income people were completely opting out of holiday gifting this year amid higher prices on essentials.
Such financial stress is being felt at the food pantries such as the one at Shiloh Church in Oakland, California. In the past three months, Shiloh has seen a spike in the number of people, particularly those with jobs, coming in to pick up a weekly box of essentials or shop at its market for free produce and other food, according to Jason Bautista, who runs the food pantry.
That prompted Bautista to bring in more holiday toys for the annual giveaway set for this Saturday. It will have about 2,000 toys to donate to families this weekend compared with about 1,500 a year ago.
“Families that would normally go to Safeway can’t afford to with their fixed incomes,” Bautista said. “Their dollar is not stretching.”
Miriam Canales, 34, of Oakland, has been going weekly to Shiloh for free food since the beginning of the pandemic. Her husband lost his job as a chef at a restaurant that permanently closed in the spring of 2020. He got another job at a different restaurant a few months ago, but he’s only working on average six hours a week.
She said higher food prices have added financial stress, and she will not be buying gifts for her children, ages, 13 and 6. Instead, she plans to pick up toys on Saturday at Shiloh Church.
But Canales says she feels grateful this holiday season because of her husband’s job as well as her daughter’s recovery from brain radiation that landed her in the hospital with epilepsy a year ago. Now she’s healthy again.
“I feel blessed,” Canales said.
