New York (CNN) — Shoppers will be splurging less this holiday than in past years, major retailers say.
Best Buy, Lowe’s and Kohl’s all reported sales declines during their most recent quarter Tuesday and are forecasting holiday sales to drop from a year ago.
“Consumer demand has been even more uneven and difficult to predict,” Best Buy CEO Corie Barry said in a statement, noting that the company “prepared for a customer who is very deal-focused.”
Holiday sales are predicted to grow this year but at a slower rate.
In 2021, Holiday shopping sales spiked by 14% and grew by a healthy 5% last year. But Moody’s Investors Service said in a report today that consumers are “losing spending steam” and holiday sales will grow by just 1% to 3% this year.
Shoppers have become more cautious in the face of inflation, higher interest rates and the resumption of student loan repayments.
Moody’s analysts say the high cost of living and dwindling savings will cause low and middle income consumers to shrink their holiday budgets.
Many customers are pulling back on major discretionary purchases like TVs and furniture and have shifted to focus on essentials. Walmart, Costco and discount clothing stores such as TJ Maxx could benefit from shoppers seeking out value, Moody’s said.
“Retailers offering a combination of value and non-discretionary essentials will see their sales outperform the broader retail industry this holiday season,” according to Moody’s.
Since the Covid-19 pandemic in 2020, retailers have started Black Friday deals earlier than ever to draw shoppers.
“One trend that’s sticking is a longer holiday season. Christmas creep has gotten particularly pronounced,” said Berna Barshay, an independent retail analyst.
Retailers have also been dealing with higher losses from shoplifting.
But there are signs that these problems could be easing.
Dick’s Sporting Goods in August blamed an “increasingly serious” theft problem for its profit plunge. But the company reported Tuesday that its profit bounced back this quarter.