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Will the Economy Make this a Christ-‘meh’ Season?

September 14, 2023


Loads of uncertainty surround this year’s holiday shopping season. This ambiguity is motivating some economists to label the near-term economy a bit of a “meh.” The Oxford Languages Dictionary defines “meh” as “expressing a lack of interest or enthusiasm.” Economist Grace Kite agrees that “meh” pretty well describes the current economy but, she insists, the news isn’t all bad. She explains, “The good news is that in all the recently published forecasts, economists are much more optimistic than they were. Inflation is slowing and coming under control. And although higher interest rates will damage people’s finances, economists agree this won’t be enough to cause a recession.”[1] Journalist Paul Berger reports that supply chain indicators confirm this holiday season’s sales could be mediocre. He writes, “The period from late summer into fall is usually the busiest time of year in supply chains, as retailers rush clothing, electronics and holiday-season decorations to consumer markets and freight operators look to boost profits on the surging demand. [However,] this year’s peak shipping season is arriving with a whimper.”[2]


The ‘Meh’ Economy


As I discussed in an earlier article, there has recently been a historic rise in consumer debt and this cause for some concern.[3] Journalist Telis Demos reports, “The frequency with which people are becoming late with payments on their debts for some kinds of loans is returning not just to pre-pandemic levels, but even moving beyond them. The percentage of credit-card and auto-loan balances transitioning into delinquency — that is, going from current to becoming 30-days-plus late — is happening at a pace faster than that of 2019, according to the Federal Reserve Bank of New York.”[4] And one of the most important cohorts retailers are relying on, members of Generation Z, are accumulating debt faster than other groups. Journalist Nora Colomer reports, “Credit card balances grew the fastest among Gen Z cardholders in the second quarter of 2023, according to a recent TransUnion survey. Gen Z’s balances increased 51.9% to $55 billion, representing 5.7% of all balances. This uptick in card balances is expected to drive an increase in refinances, especially among Gen Z consumers, the survey said. Fifty percent of this generational group said they planned to apply for new credit or refinance existing credit, compared to 32% for the entire population, within the following year.”[5]


The not so hidden message of growing debt is that consumers are continuing to spend. Journalist Neil Irwin writes, “Americans saw income growth that slowed to a crawl in July, but their spending rate decidedly did not. … Americans are saving less to continue spending robustly, even as income growth slows — telling us something important about the economic currents that will shape the next year. If it continues, that dynamic will prevent a recession from taking hold, though at the cost of leaving household balance sheets more fragile.”[6] Although consumers continue to spend, their spending habits have changed. Journalist Dean Seal reports, “Shoppers have shifted their spending habits in a post-pandemic world, leaving retailers in the lurch. … [The recent] lackluster results [of major retailers] offer more evidence that strained consumers [are] feeling the weight of higher debt and increased prices [and] are redirecting their discretionary spending away from certain products and goods.”[7]


What Does This Mean for Holiday Shopping?


According to journalist Will Feuer, “Government data indicate that household spending rose more than economists expected in July. Americans spent more on groceries, dining out, services such as housing and more as price pressures remained modest.”[8] This doesn’t bode well for a hot holiday shopping season. If the trend continues, you can expect more family dinners and less giving of presents. In order to attract stressed consumers, retailers will likely have to discount deeply. Feuer reports, “Customers are responding to deep discounts.” Retailers are very aware of these troubling trends. Journalist Lori Ann LaRocco reports that a CNBC Supply Chain Survey found retailers expect 2023 “to be a downbeat holiday spending season.”[9] She adds, “The survey’s early read on peak season order activity shows retailers ordering less and expecting the consumer to be on the lookout for discounts and freebies to entice them to buy more.” In fact, deal-shopping has already begun for some consumers.


Maria Bailey, CEO of BSM Media Inc., explains, “With 74% of moms surveyed concerned about the economy, 15% say they have already started shopping for the holidays. They are picking up items that they see on sale now and holding them until December. In fact, 85% of moms say they will be searching for deals this holiday season. … Only 5% will wait until December to begin spending for the holiday season.”[10] In addition to shopping early, Bailey indicates that more moms are going to be taking the digital path to purchase. She reports, “Ninety-four percent of Moms intend to shop from a mobile device, making it necessary for brands to have easy-to-use applications and mobile ecommerce. Two-thirds of all holiday shopping is predicted to be done online this season, according to the moms surveyed.”


Supply chain journalist Helen Atkinson expects that, along with changing consumer behavior, the economic strains discussed above will substantially separate retail winners from retail losers this holiday shopping season. She explains, “It’s not all about supply and demand, however. [Howard Meitiner, former president and chief executive officer of Sephora USA,] thinks we’re going to see a lot of companies go out of business that are trying to prop up a business model that simply doesn’t work anymore. He holds up department stores as an example; although U.S. retail sales in July were up 3% year-on-year, they were 3.4% down if you looked just at department stores. Consumers want an omnichannel, integrated experience, Meitiner says. … The winners this season are going to be companies that keep their loyal customers close, and maintain a real focus on customer service.”[11]


Concluding Thoughts


One key to surviving a “meh” economy and an “iffy” holiday shopping season is staying on top of the changing business environment. Atkinson notes, “Smart companies are investing in supply chain expertise in order to better control supply, and also in artificial intelligence to better track and predict demand at the SKU level.” Enterra Solutions® is helping clients navigate these rough seas with the Enterra Revenue Growth Intelligence System™ (ERGIS™), powered by the Enterra Autonomous Decision Science™ platform. The holiday shopping season will rapidly come and go; however, resilient enterprises will invest in technologies that will help them survive during a “meh” economy.


[1] Grace Kite, “The economy is going to be ‘meh’ in 2024 but your marketing plan can’t be,” MarketingWeek, 4 September 2023.
[2] Paul Berger, “Where Peak-Season Shipping Is Headed, In Charts,” The Wall Street Journal, 29 August 2023.
[3] Stephen DeAngelis, “Consumer Credit, Generation Z, and the Consumer Packaged Goods Sector,” Enterra Insights, 31 August 2023.
[4] Telis Demos, “Is It Time to Worry About Consumer Debt? What Is Going On in Seven Charts,” The Wall Street Journal, 16 August 2023.
[5] Nora Colomer, “Recession may be off the table as economy moves toward ‘soft landing’: VantageScore.” Fox Business, 17 August 2023.
[6] Neil Irwin, “Americans are saving and earning less. But they won’t stop spending.” Axios, 31 August 2023.
[7] Dean Seal, “Consumers Are Spending Like It’s 2019,” The Wall Street Journal, 26 August 2023.
[8] Will Feuer, “Dollar Stores Flash Warning Signs on Consumer Spending,” The Wall Street Journal, 31 August 2023.
[9] Lori Ann LaRocco, “Retailers are preparing for a discount-heavy, down holiday season: CNBC survey,” CNBC, 16 June 2023.
[10] Maria Bailey, “How Moms Intend To Shop This Holiday Season,” The Marketing Insider, 29 June 2023.
[11] Helen Atkinson, “The Gap Between Retail Winners and Losers Will Widen This Coming Peak Season,” SupplyChainBrain, 24 August 2023.

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