Inflation fuels holiday online sales to record $204 billion: Adobe

Online sales during the holiday season rose nearly 9% to a record $204.5 billion, Adobe Analytics said Wednesday, as consumers opened up their wallets to spend on gifts for family, friends and for themselves.

But the uptick in sales was driven, in part, by higher prices on goods from apparel to groceries to appliances, said Adobe, which analyzes 1 trillion visits to retailers’ websites.

Online prices increased 3.1% in December compared with the prior year and rose 0.8% month over month. That marked the 20th consecutive month of online inflation on a year-over-year basis, and followed a record year-over-year spike in prices of 3.5% in November, Adobe said.

“It’s definitely a key contributor to the growth but it’s not the totality of the growth,” said Vivek Pandya, lead analyst at Adobe Digital Insights, about the continued inflation. “There’s a level of just innate growth happening in overall retail sales … and we’re viewing the inflation as one of the explanatory factors.”

Consumers have also been buying into more expensive categories, such as jewelry, which could be another factor contributing to the retail sales growth, he noted.

And sales might have been even higher if consumers didn’t find so many items online out of stock. Retailers have been tackling supply chain hurdles in recent months, leaving shipments of merchandise delayed during key shopping days. Companies are also grappling with how to work through another surge in Covid cases in the U.S., fueled by the highly contagious omicron variant, that has left many of their workers sick and on the sidelines.

Apparel companies Lululemon and Abercrombie & Fitch said this week that their fiscal fourth-quarter sales will come in lower than previously expected due to some of these constraints. Urban Outfitters said it struggled to keep an assortment of home goods in stock, whereas it could use air freight to bring clothing from overseas.

Consumers saw more than 6 billion out-of-stock messages on retailers’ websites during the holiday period, which runs from Nov. 1 to Dec. 31, according to Adobe. That’s up 10% from year-ago levels and up a whopping 253% compared with the 2019 holiday season, Adobe said.

Still, the out-of-stock messages might have just pushed consumers to other retailers’ websites in search of sought-after goods.

“The thing about online is you have a bit more flexibility in choice, where if an item it out of stock on one site, you can open up another window browser and look at another site,” said Pandya.

A separate analysis by Salesforce found retailers’ holiday inventories shrank 2% compared with 2020 levels due to lingering supply chain issues.