Finance Expert Tom Arnold Discusses Holiday Shopping Trends

How are tariffs affecting holiday retail?

Arnold: The threat of tariffs earlier in the year made retailers scramble to load up on inventory before incurring tariffs. Consequently, the broad effects of tariffs on consumers appear to be muted, and if tariffs are lifted in the near future, the effects will be dodged completely. 

Some retailers, particularly smaller ones, could not buy in large quantities before tariffs were imposed. These retailers do not have the capacity to buy in large quantities because of financing or an inability to store massive amounts of inventory. These entities are feeling the full brunt of the tariffs as they try to replenish inventory before the holidays. In a similar fashion, if retailers had a significant international presence, tariffs are reducing sales from abroad that cannot be made up with domestic sales.

Will inflation affect holiday shopping costs?

Inflation from recent years has escalated prices and consumers from the middle to lower income levels are feeling these effects, which may reduce demand during the holiday season. The most recent consumer demand has been primarily from the upper income levels, which may not be sustainable throughout the holiday season and beyond.

Is the holiday shopping season starting earlier, or is it my imagination?

Shopping is starting earlier, and inventory has been getting out onto the retail floor or available online earlier to lengthen the holiday buying season. This year, Halloween shopping started in late July and early August as opposed to mid-to-late August last year. The December holiday shopping season unofficially starts in October with Amazon Prime Days, but merchandise started emerging on the sales floor and online in September, with some items appearing as early as August. A longer shopping season increases the opportunity for selling merchandise and the retailers are ready to move the inventory they acquired before tariffs.     

What advice do you have for consumers as we enter the holiday spending season?

Make a budget and stay within the budget. With so many uncertain economic conditions at play, excess spending is not advisable.