Inflation likely to hold back Houston’s holiday retail recovery
Holiday spending is expected to rebound to pre-pandemic levels, but the outlook in Houston is not as bright, according to a survey of consumers.
The survey, by the consulting firm Deloitte, found that the pandemic will continue to disrupt the retail environment in Houston as its after-effects — inflation, supply bottlenecks and growing preferences for online shopping — ripple through the economy. Houston consumers plan to spend around $1,269 on average this holiday season, up 6 percent compared to $1,201 last year, but still 19 percent below the $1,562 they planned to spend in 2019.
The local projections fall short of the national forecast which suggests American shoppers plan to spend roughly what they did before the pandemic disrupted shopping patterns. Nationally, Deloitte expects shoppers will spend $1,463 on average this year, compared to $1,496 in 2019.
Tony Torres, Deloitte’s regional audit leader in Houston, said inflation appears to be taking its toll on Houston. Prices are rising at their fastest pace in more than decade, undermining spending power as people pay more in grocery stores and at the gas pump. That leaves them with less to spend on holiday gifts and other discretionary goods and services.
“Inflation must be impacting us a little more than nationally,” Torres said.
Shoppers in Houston will shift some of their spending from gifts to experiences such as traveling to see family, dining out and attending holiday parties as the pandemic loosens its grip, Deloitte’s survey found. Houstonians said they planned to spend $526 this year on travel and entertainment this year, up 40 percent from $376 last year but down 13 percent from $606 in 2019.
Houston residents remain anxious about the pandemic, the survey found — 44 percent of shoppers in Houston are nervous about shopping in-store this year because of possible infection, compared to 46 percent last year. Houstonians plan to spend only slightly more in-store (32 percent of their shopping list) than they did last year (28 percent), according to the survey.
In addition to fears of shopping indoors as the highly infectious delta variant spreads COVID-19, online shopping habits formed during the pandemic have become entrenched, Torres said. Cyber Monday, the Monday after Thanksgiving, is expected to outperform Black Friday, the day after Thanks
giving, with 37 percent of Houston shoppers planning to buy during CyberMonday compared to 31 percent on Black Friday. Dreaded supply chain
But for people to buy the gifts on their lists, retailers will need to have the merchandise on their shelves and in their stock rooms.
That is an issue vexing 64 percent of retail executives as supply chain disruptions hold up goods in Asia, where many consumer products are manufactured, and in U.S. ports, where labor shortages and transportation bottlenecks leave goods waiting on the docks, according to Deloitte's national survey.
Augie Bering, owner of Bering’s Hardware in Houston, said he just received a Cuisinart order that was scheduled to arrive in April and he’s still waiting for Christmas ornaments that were due to arrive two months ago. Bering said he’s ordering more, ordering early and from more vendors in hopes of getting merchandise on time for the holiday season.
“That’s all we can do,” he said, “short of leasing a freighter and semi-trucks.”
More than 75 percent of Houstonians surveyed by Deloitte are worried they won’t be able to find holiday items they need. Around 65 percent of them plan to shop before Thanksgiving to help make sure that doesn’t happen, according to the survey.
The items shoppers in Houston are most concerned about running out: electronics, toys and home and kitchen items.
Nationally, Deloitte predicts holiday retail sales could rise 9 percent from a year ago to $1.3 trillion, with ecommerce sales jumping as much as 15 percent to $218 billion.