Puerto Rico retailers forecast stable holiday sales
Due to a late Thanksgiving Day on Nov. 28, this year’s holiday peak shopping season is five days shorter than in 2023.
This year’s holiday retail sales are likely to be similar to 2023 sales or increase at a slower pace because of a shorter holiday shopping season, inflation and the upcoming elections, according to local industry sources and stateside forecasts.
Due to a late Thanksgiving Day on Nov. 28, this year’s holiday peak shopping season — from Black Friday (Nov. 29) to Christmas Eve (Dec. 24) — is five days shorter than in 2023. However, in recent years, retailers have capitalized on shoppers who begin making their purchases as early as October.
Lymaris Otero, executive director of the Puerto Rico Retailers Association, pointed out that the holiday shopping season starts earlier in Puerto Rico than on the mainland U.S.
“In Puerto Rico, particularly since the [COVID-19] pandemic, [the season] has changed. We start to feel the holiday spirit very early. In fact, it has already started, with some companies already announcing Christmas in September and Christmas in October,” Otero told News is my Business.
Black Friday is not what it used to be when it kicked off the holiday sales season, she said, adding that since the pandemic, e-commerce has driven sales, extending them from October to back-to-school in January.
“Retailers are ready with sufficient inventory and being creative with special sales during pre-Thanksgiving, Thanksgiving and Christmas,” she said.
While slowing down, inflation is likely to influence consumer spending during the 2024 holiday shopping season, causing many consumers, who are still coping with elevated prices, to hold back on holiday spending and rely more on price comparisons and discounts.
“Inflation levels have been falling and are now close to 2%, very different from previous years when they were at 6%, 8%, reaching almost 10%,” Otero said. “On the other hand, the price index has normalized in many of the categories, but consumers’ savings have decreased, and federal funds have ended.”
Nevertheless, Puerto Rico’s retailers expect a robust season.
“Sales are expected to be like last year, and although inflation always influences consumer selection, retailers create offers that adapt. They’re prepared and working on marketing strategies to achieve this,” Otero said. “This year has a positive trend of increasing sales, and we hope to end the year like this.”
Walmart Puerto Rico expects 2024 holiday sales to be similar to last year’s, Coral Cummings, the retailer’s director of public and government affairs, told News is my Business.
“[We are] preparing to receive a larger number of customers in fewer days and offer them, as always, the products they are looking for at the best prices,” she said.
Regarding the impact of inflation on sales, Cummings said: “Inflation causes greater challenges for consumers, so we focus on serving them by offering the best prices of the season. This way, more customers will come to all our stores.”
Economist José Joaquín Villamil, founder and CEO of Estudios Técnicos, also projected this year’s holiday sales to be on par with 2023 sales.
“We don’t expect any significant changes, but none of the changes we do see are positive — they won’t stimulate sales. Quite the opposite, but nothing drastic,” he told News is my Business.
“However, if one considers inflation, sales will likely come up a bit short, just as they have throughout the year. In current dollars, without adjusting for inflation, sales will be more or less the same, but if you factor in inflation, sales in real dollars will be a bit lower,” he explained, adding that shrinkflation is also a factor.
In economics, shrinkflation — also known as package downsizing, weight-out and price pack architecture — is the process of items or products shrinking in size or quantity while prices remain the same. Current prices refer to the nominal value, which is the price at the time of sale without adjusting for inflation. Real (or constant) dollars refer to the value adjusted for inflation, providing a more accurate picture of purchasing power over time.
The Puerto Rico and U.S. elections are expected to influence holiday sales resulting from increased uncertainty about the economy and an extra crowded media market. During election years, retailers typically struggle more to draw consumers’ attention because tighter supply of media spots and higher advertising rates. During this time, consumers’ attention is more fragmented.
“Elections can influence consumer behavior because they generate a lot of uncertainty among consumers. Some wait to see who wins, what the new administration will do, etc., before they make their purchases,” Villamil said.
Another factor that could significantly affect holiday sales in Puerto Rico is skyrocketing energy costs, Villamil said, adding: “Consumers will have to rein in their spending to pay their power bills.”
The bigger picture
Holiday season sales generally account for more than half of U.S. retailers’ annual revenue.
Deloitte’s holiday retail forecast projects U.S. sales will increase between 2.3% and 3.3% in 2024, the slowest pace in six years, compared to 4.3% last year. Total sales should reach $1.58 trillion to $1.59 trillion during the November to January timeframe, the firm reported.
E-commerce will be a key driver of overall retail sales growth in the upcoming season, with Deloitte projecting online sales to grow between 7% and 9% year-over-year during the 2024-2025 holiday season, for a total of $289 billion to $294 billion.
“Rising credit card debt and the possibility that many consumers have exhausted their pandemic-era savings will likely weigh on sales growth this season compared to the previous one,” said Michael Jeschke, leader of Deloitte Consulting’s Retail & Consumer Products.
“Inflation is both a headwind and tailwind to holiday sales,” said the economist Akrur Barua of Deloitte’s Research & Insights team. “While declining inflation aids consumers’ purchasing power, it also is expected to negatively impact the nominal rise in the dollar value of sales.”
Meanwhile, the Mastercard Economics Institute is forecasting a 3.2% increase in U.S. sales (excluding automotive sales) from Nov. 1 to Dec. 24, up from 3.1% in 2023.
“Inflation continues to cool, and consumers continue to expect — and demand — promotions and discounts. Discounts and promotions are no longer just ‘nice to have’; they are essential,” Mastercard’s report stated.
