Will Holiday Retail Sales Underdeliver in 2023? Recommerce Solutions Can Help

To many, the passing of Thanksgiving marks the “official” beginning of the holiday shopping season, but for years, the annual Q4 buying rush has been inching forward into the weeks ahead of Black Friday. In fact, one report found that half of consumers began their shopping even before Halloween.

Whether this creep is caused by retailers pushing earlier, more aggressive sales, or simply the fresh memories of COVID-driven supply shortages and financial stress, the fact of the matter is that the holiday shopping season is forever growing—in duration, at least. Revenue, on the other hand, might turn out to be a different story.

Will Holiday Sales be Light in 2023?

Developments around holiday spending are always concerning to the countless brands and retailers that rely on the yearly Q4 surge to keep them in the black, and these businesses watch eagerly as third parties make their own predictions.

As far back as August, industry organizations and news outlets began warning of underwhelming consumer goods sales over the 2023 Holiday season, with headlines such as  ‘Ho-hum holiday’ spending expected as shoppers deal with economic cross-currents and Americans plan to keep cutting back on spending through the holiday. 

But the National Retail Federation (NRF) has published a release titled “2023 Holiday Spending to Reach Record Levels” and many news organizations are running with this more positive spin.

But which is it? In reality, each of these articles paints a more nuanced picture.

What to Expect in 2023’s Final Quarter

Sensational headlines heralding only a disappointing or record-breaking year aren’t telling the whole story: that year-over-year spending, while still growing, will slow significantly compared to recent seasons.

To set the stage, the New York Times broke down some of NRF’s historical data. In 2022, holiday retail spending increased by 5.3% over the previous year. And America’s 2021 holiday spending bested 2020’s by an impressive 12.7%.

For the 2023 season, however, the NRF predicts an increase of just 3-4% over 2022, perhaps the lowest increase of the last five years. Performance like this would put growth firmly back in line with pre-pandemic patterns, which show an average growth rate of just 3.6% per year over the decade preceding the pandemic.

As CNBC reports, logistics giants and major nationwide retail chains seem to corroborate NRF’s take. Shipper C.H. Robinson says it’s looking out for a possible downturn in consumer spending, while Target leadership says it’s seeing consumers dial back their spending across the board, even on groceries.

Reuters has highlighted concerning predictions from major institutions as well: Walmart blamed resuming student loans, rising fuel prices, and rising interest rates, while Deloitte warned that a slumping job market could depress seasonal sales. The San Francisco Federal Reserve highlighted that nationwide pandemic savings fell considerably from 2.1 trillion in 2021 to 500 billion today.

The consequences of all this could be troublesome for consumer goods companies.

Could Slowing Growth Mean Growing Surplus?

Slowing growth may be brought on by a number of interacting factors, but no matter what forces are driving this holiday season retail slowdown, the problem might shortly become obvious to those with the most to lose—retailers.

Any goods that a business produces or orders in anticipation of the holiday rush cost money up front. If it does turn out that retailers have overshot their projections, they’ll be faced with an excess of unsold goods sitting in their warehouses taking up space rather than flying off shelves. 

But no matter how sales figures shake out this season, the initial weeks of Q1 were never going to be a cakewalk for US retailers due to another major concern—the massive number of returns that they already expect to be handling in early 2024.

The Built-in Challenge of Post-holiday Returns

For consumer goods stores, the season doesn’t end with the eighth night of Hanukkah, a relaxing Christmas morning, or a quiet New Year’s day. Actually, the weeks that follow are when much of the real work begins. 

Through at least February, these businesses will keep busy honoring gift cards, fielding customer service calls for newly owned products, and processing high volumes of returns and exchanges. An NRF report on the 2022 season shows that of the $960 billion of holiday spending, 17.9% of purchases by dollar value will be returned or exchanged, totalling $171 billion in lost sales. While estimates and specific metrics vary from source to source, these holiday return figures are in line with the general return rates throughout the year—about 16.5% for both online and in-store purchases.

Over the Q4 of 2022, businesses weren’t too shy about admitting their inability to handle these returns and exchanges, often refunding buyers and letting them keep the items that couldn’t be processed and remarketed for less than their retail value. While there’s no reason for a business to needlessly put themselves under water on inexpensive products, this is hardly a sustainable strategy.

But what exactly can these stores do to clear space and recover the value of merchandise in a quick and cost-effective way?

A New Generation of B2B Recommerce Solutions

Even outside the holiday season, major organizations around the world find themselves inundated with returned and unsold goods. In fact, managing this excess inventory at scale can be so time consuming and resource intensive that even the most successful businesses struggle to do so. When brands and retailers count on traditional approaches to liquidation, they face barriers and drag at every turn.

That’s exactly why more industry leaders than ever before are now outsourcing these resale efforts to specialized B2B recommerce platforms.

Partnering with these third parties to build robust multi-channel recommerce strategies works for a few reasons:

Recovery Without Sacrificing Velocity

Wholesalers and brokers offer low-ball, take-it-or-leave-it offers, and are too often just the first in a chain of many like them to take their slice of your inventory’s value. This might be forgivable if they were providing effortless, low-risk relief for excess inventory, but that’s not the case.

Liquidators represent a single point of failure in your efforts to keep warehouses tidy and cash flowing—if your preferred partner closes their doors, you’ll need to build a relationship with another buyer, but that can be time consuming. You could use multiple liquidators, but juggling a handful of relationships multiplies your workload—especially if they rely on phone calls, spreadsheets, and emails in lieu of purpose-built services and platforms.

Solutions like B-Stock can centralize communication and handle both strategic & administrative obstacles to velocity like marketing your sales, answering buyer questions, mediating disputes, and so on, helping lots leave your warehouse in just a few days.

Large, Diverse Buyer Base

B-Stock has developed a worldwide network of hundreds of thousands of buyers, and works constantly to bring in additional relevant, reputable buyers. This means you’ll never again have to prospect for liquidation partners. Even better? With so many eager buyers standing by, there’s demand for virtually any goods your business has to offer, no matter the quantity or condition.

With B-Stock, selling to a thousand buyers is no more difficult than selling to one.

Multiple Ways to Sell

B-Stock offers a suite of flexible solutions & services to optimize recovery, inventory cycle time, resale predictability—or a combination of all these based on your business priorities.

Different solutions include:

• Spot Auctions, which maximize recovery rates through competition on a flexible schedule and offer a real-time understanding of fair market prices
• Contract Auctions, which award a high bidder a binding contract to purchase certain goods from you, locking in pricing for months ahead for of time while ensuring unparalleled cycle predictability at high volume
• Direct sales, which are designed to move out one-off and unusual lots as soon as possible by linking sellers up with hand-curated buyers or setting up highly exclusive “flash auctions”

Experts can help your business implement these models in a custom combination that works best for your particular objectives.

Data & Technology to Drive Smart Business Decisions

For nearly two decades, B-Stock has maintained detailed records of all sales activity that takes place on its platform and while this is handy for bookkeeping purposes, the real advantage of access to this body of data lies in analytics.

B-Stock’s proprietary analytical model uses data from over 100,000 auctions, more than 100 unique variables, and two different machine learning models to accurately predict the recovery rate of any given lot based on known variables like category, condition, brand, and more.

Between expert advice from our account managers and these powerful predictive analytics capabilities, data-backed decision making has never been so easy.

Ready to Revolutionize Your Recommerce?

Over the last several years, it seems like the only constant has been change. Still, top brands and retailers need to be able to take it all in stride, push forward, and succeed. A key part of that is knowing when to reach out for help so that your business can focus on its primary mission rather than getting buried under mountains of surplus merchandise. 

No matter what this holiday season throws at you, B-Stock can provide your organization with the demand, efficiency, and insight required to build a comprehensive recommerce strategy that will serve you for years to come.

To learn more about what B-Stock can do for you, contact us today.