75% of consumers plan to start holiday shopping early this year: ICSC

Tom McGee, CEO of the retail trade association ICSC, joins Yahoo Finance to discuss holiday shopping trends and potential impacts from supply chain issues.

Video Transcript

ALEXIS CHRISTOFOROUS: Well, despite all the supply chain chaos, a leading shopping center group predicts holiday sales will jump nearly 9% this season. Joining me now is Tom McGee, CEO of the retail trade association, ICSC. We're also joined by Yahoo Finance's Karina Mitchell. So Tom, good to see you here on the show again. So tell me, what makes you so optimistic that the holiday shopping season will be strong?

TOM MCGEE: Well, first of all, it's good to be with you again. We are projecting a nearly 9% growth in holiday sales. And I think the same conditions that have led to really strong retail sales, you know, there's been some peaks and valleys clearly across 2021. But, you know, generally, the retail environment has been strong. And you have high personal savings rates, a lot of fiscal stimulus, obviously, at a relatively strong job market. And honestly, just the desire of people to get out of the house and, you know, to go shopping and eat out, et cetera, I think, lead to that, you know, optimistic projection.

Acknowledge that in our mind, the only real [AUDIO OUT] reaching that projection would be some of the supply chain issues that are obviously well in the public discourse right now. Absent that, I really think that this will be a strong holiday season. It will be important for retailers and for shoppers, retailers to encourage shoppers and for shoppers to actually go out and shop early to try to avoid those issues if they arise.

KARINA MITCHELL: These numbers are really music to retailers' ears, right? They really need this boost at this time of the year, the holiday season. What percentage do you estimate will actually go into the store and physically shop versus online shopping? Obviously, we saw a huge growth in online shopping, particularly last year, given the pandemic circumstances.

TOM MCGEE: Yeah, so our projection for physical store growth is about 5%, e-commerce growth about 13%. The vast majority of sales still happen in a physical store. But 85% of shoppers will do some element of their shopping within a store, within a physical store. I think the big [AUDIO OUT] here is, you know, both channels will do very well. We saw over the course of the pandemic the convergence that's taking place amongst the physical and the digital world will continue. You'll see a huge amount of curbside pick-up, click and collect.

Quite frankly, I think that because of supply chain issue and the concern around the supply chain issues, consumers are [AUDIO OUT] increasingly agnostic as to where they buy things. And what they're really going to do is look at where availability is and make those purchases via whichever channel the product is available, whether that's in the store or e-commerce.

ALEXIS CHRISTOFOROUS: We're having a little bit of trouble hearing you. I hope that clears up, Tom, but I hope you can hear me. I'm wondering in terms of deals and promotions, given this backdrop of higher inflation, should people be bracing for higher prices? I wonder what the expectations are for even finding deals this holiday shopping season.

TOM MCGEE: Well, I think what you'll find is a little bit different this holiday season. You're going to see deals and promotions probably happen a little bit earlier to encourage people to get into the store earlier as part of that process of trying to even out holiday sales over the course of the holiday season. I think promotions will always be a part of the holiday season, and they will be this year. However, I don't think you're going to see the deep discounts that you've seen in the past. And that will be, I think, official to retailers and their profit.

KARINA MITCHELL: And so, tell me, what are the products that people should be rushing out to buy? What's the hot commodity that people need to make sure they get before it runs out? I hear Christmas trees and decorations are something that, you know, people should make sure they go and get early.

TOM MCGEE: Well, I think anything that has to do with semiconductors or electronic always going to be-- those are obviously high in demand for sure. I think that, as you mentioned, anything building supply or holiday decoration related is also in high demand right now. A number of retailers-- and I heard it earlier in the show-- have, you know, actually contracted to have containers, and planes, and so forth to deliver some of those high impact items to make sure they're on shelves during the holiday season.

I think one of the things you might see happen this year, if there really are supply chain challenges, is you'll see an increased amount of spend towards gift cards. People are still going to spend, but if they can't find the product that they want, they'll likely buy a gift card to gift to somebody and provide them the flexibility to buy those items in 2022.

ALEXIS CHRISTOFOROUS: All right. Tom McGee of ICSC, thanks for being with us and for sharing your predictions on holiday spending.