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Pandemic fallout could slow U.S. online holiday spending growth

10/20/2021 | 10:02am EST
FILE PHOTO: FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall, United States' largest retail shopping space, in King of Prussia

(Reuters) - U.S. online holiday spending is expected to grow at its slowest pace in at least eight years, as product shortages, higher prices and lingering pandemic-related uncertainties threaten to put a strain on the shopping season.

Adobe Analytics forecast an average 10% growth or $207 billion in online sales in November and December, compared with a record 33% jump in 2020 when people chose to shop from home, instead of traveling to stores during the pandemic.

After grappling with virus restrictions on stores for the better part of last year, retailers are now dealing with a slew of pandemic consequences including a clogging of global supply chains that could lead to a shortage of everything from Nike shoes to Apple iPhones during the holiday quarter.

The lack of clarity around what items could run out of stock, and when, is making it hard to determine whether product shortages could push consumers to shop more online or in-store, Adobe Digital Insights lead analyst Vivek Pandya said on Wednesday.

The expected shortages and the risk of a resurgence in COVID-19 cases are also part of the reason for Adobe's broader spending forecast range, between a 5% and 15% gain, Pandya added.

The 2021 growth, expected to be partly driven by product price hikes, would be the smallest rise since Adobe started tracking holiday spending data in 2014.

With companies raising product prices due to skyrocketing commodity and transportation expenses, consumers are expected to pay 9% more between Thanksgiving and Cyber Monday this year, Adobe said.

It said out-of-stock messages on retailers' websites were up 172% at the end of July from pre-pandemic levels, with apparel stocks depleting the fastest, followed by sporting goods, baby products and electronics.

To cope with the potential inventory shortfalls, retailers are offering fewer discounts and looking to spread out the selling season by encouraging shoppers to start their holiday shopping early this year.

(Reporting by Deborah Sophia in Bengaluru; Editing by Shinjini Ganguli)

By Uday Sampath Kumar and Deborah Mary Sophia


ę Reuters 2021
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