Analyzing 2022 Holiday Season Sales

Covid-19 created disruption like no other in the supply chain and logistics industry. As the pandemic started, borders were shut down, manufacturing declined and consumer purchasing parameters changed significantly. As we close 2022, companies are recovering from the bull-whip effect that resulted from the pandemic.

With inflation highest in four decades, looming recession in the US and a possible global recession not far behind this Thanksgiving and Black Friday sales had a lot of eyes including that of Feds.

Black Friday and Thanksgiving sales provide key insights into the health of the US consumer. Covid-19 supply chain issues, rising interest rates, high inflation, and macroeconomic conditions make this year’s holiday season more watchable.

This Thanksgiving and Black Friday ended with the yield curve inverted, although they did not have a role to play in that inversion. But it shows how sentiments would have played in people’s minds this sale season. This signals that people believe short-term rates will be higher than long terms rates because they fear a recession is looming.

Despite continued economic uncertainty, US shoppers did not disappoint. More details are below.

Synopsis of this holiday season

Three factors that determined sales this season

1. Middle-class families are spending less

There is a divide that is ripping through America’s economy. Well-off consumers (higher income group) who are faring well financially are shopping and keeping some high-end retailers and travel companies optimistic about the holiday season. At the same time, low and medium-income groups are struggling with rising prices.

Coming out pandemic, experts are seeing that people are scaling back on their holiday plans this year compared to the last few years. Hence, consumer spending is not crazy nuts in the 2022 holiday season. While most of the retailers started the holiday sales discounts back in October and some of these discounts are still continuing, sales remained flat in October. WSJ stated:

Middle-income consumers are clearly feeling the inflation squeeze. Comparable sales at Macy’s namesake department stores declined 4% (including licensed stores), while they increased 4.1% at luxury-tier Bloomingdale’s. Bluemercury, also a Macy’s-owned chain of higher-end makeup and skincare products, saw comparable sales up 14%. Kohl’s said on its earnings call on Thursday that its core middle-income consumers are feeling the worst squeeze, buying fewer items per trip and trading down to private brands, while low- and high-income customers were faring better.

Middle-class families (earning between $50,000 to $99,000) are most hit by inflation. They are feeling the squeeze because of high grocery, energy, and housing costs. This is disrupted their budgets to spend elsewhere.

2. High Inventories and Discounts

Big box retailers and suppliers have a lot of excess inventory. This year retailers are not only competing with one another, but they are also competing with a clock. Last year you could not get a present for life’s sake this year stores are begging customers to buy them. The interesting thing is, discounts are on for things which customers do not really want. Due to supply chain issues, inventories last year arrived late. This inventory is on sale this year but no one wants it.

The holiday season this year started very early. Amazon, Walmart, and other retailers began offering discounts in October. Wayfair (My Employer) offered a second Wayday event for the year in October. Clearly shows there is an excess of inventory that these retailers and suppliers want to get rid of.

Suppliers and retailers are also cautious not to provide very steep discounts to eliminate inventory. They are using these discounts as an opportunity to adjust the price of the product which they continue to want to sell next year. And also, where shoppers are willing to pull their wallets out.

Excess inventory is driving prices down which is evident from October’s inflation report where inflation came down to 7.7% compared with 8.2% in the previous month. Suppliers are feeling the heat with competitors reducing the prices in a way to settle for a futuristic price that can provide good margins as freight costs go down in 2023 and 2024. This means retailers and suppliers are ready to reduce margins today in order to gain good margins in the future.

3. Ongoing inflation and upcoming recession

Cutting spending is the first thing consumers do during economic turbulence. Inflation is a key reason consumers are spending less. Inflation is causing anxiety which is reducing the cart size as shoppers decide what to buy this season.

During economic turbulence, consumers become hypersensitive to prices that trump other considerations. During such situations, consumers typically stop buying brands they are not strongly connected with or loyal to.

The cushion that was provided by pandemic-driven stimulus money is drying fast for low and middle-income groups. These families are feeling the heat of inflation.

How did we fare this season?

  • 196.7 million Americans shopped in stores and online during 5 day holiday shopping period from Thanksgiving to Cyber Monday.
    • Around 122M people visited brick-and-mortar stores, up 17% from 2021.
    • Around 130M people shopped online, up 2% from 2021.
  • Total online sales for Black Friday 2022 were $9.12B
  • Total online sales for Cyber Monday 2022 were $11.3B
  • An interesting fact was a reduction in BNPL sales by 6%. I do not want to read too much until more data is available to justify this drop. But certainly, something to keep an eye out for in the future.
  • As I have written above, low and middle-class households were impacted critically by changing macroeconomic conditions. Cart size actually dropped by 7.5% for such households compared to 2021.
    • The cart size of high-income households increased by 4.5% compared to 2021.
    Source: NRF

Where can we go from here? My Predictions

1. Less shopping in December

One thing that data is pointing towards is that the holiday season this year started earlier in October. As I had mentioned above, Amazon, Walmart, Wayfair, etc., had shopping events that lured shoppers into deals earlier than expected. What this means is December will see a slowdown in shopping. As most consumers have already purchased what they wanted.

2. Reduction in impulse shopping behavior from customers will continue in 2023.

Early purchasing with multiple discounts offered well in advance of Black Friday, allows consumers to control their shopping behavior better and reduce the risk of impulse buying. Reduction in impulse buying is a strong indicator that consumers are shopping like the economy is in recession.


Recession and Inflation mean different things for different earning groups. Inflation is crippling low and medium-class families, while those on the upper end of the spectrum do not feel its effect keenly. And the good part for the industry is the high-class section of the US economy is the one that usually drives sales. Nearly the top 20% of households account for the top 40% of consumer spending.

As I have stated above, based on what we saw this year, 2023 will have reduced spending. We are moving towards a darker 2023 season. But this is just my prediction and I could certainly be wrong. We will have to wait and see.


Nikhil Varshney

Nikhil Varshney is a product manager by profession and technologist by nature. Through this blog he wants to showcase disruption in the technology world. The idea is to break the concept into simple layman words to help everyone understand the basics

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