February shopping data from one billion consumers using Salesforce Commerce Cloud globally found that US consumers placed fewer orders and purchased fewer items than last year at the same time. Inflation drove higher prices. However, US retailers saw online revenue grow 6% year-over-year (YoY). On the other hand, global online revenue saw a 5% YoY decrease in the same timeframe.
Inflation, shipping delays, and inventory shortages impacted the 2021 holiday shopping season. Analysts suggest that are expected to remain a factor in consumer confidence and spending for the rest of the year.
The Salesforce perspective:
Rob Garf, VP and GM of Retail, Salesforce says, “Challenges consumers experienced over the holidays, haven’t dissipated in the year. While digital commerce continues to prevail, it’s clear that inflation is having an impact on overall consumer spending. With these persistent headwinds, retailers must remove friction and enhance experiences by knitting together offline and online shopping.”
Key report highlights
- Following a holiday season with modest growth, digital commerce sales in February grew by 6% YoY in the US. It decreased by 5% YoY globally.
- February order volume was down 11% YoY. The items per order decreased by 1.3% YoY (3.79 items versus 3.84 items in 2021)
- Prices for consumers in the US rose 11.2% YoY in February while globally prices increased by 4.4% YoY.
- Product inventory in February shrank by 1% in the US. It fell by 5% globally as retailers and consumers continued to grapple with supply chain issues.
- Product categories with the highest price growth in February YoY include:
- Home, Furniture (21.8%)
- Home, Appliances (17.9%)
- Home, Dining, Art & Decor (11%).
- Product categories with least price growth in February include:
- Active Footwear (1.3%)
- General Footwear (.8%)
- Electronics and Accessories (.5%)
Retailers and consumers are grappling with higher prices as labour, inventory issues, and last-mile costs drive up the cost of goods. President Joe Biden spent much of his first State of the Union address addressing the issue of inflation and promising to lower costs for American families.
Salesforce shopping index methodology
The Salesforce Shopping Index reviews the true shopping story of consumers. Analysing the activity of more than one billion shoppers across more than 54 countries powered by Commerce Cloud. Several factors are subsequently applied to extrapolate projections and actuals for the broader retail industry.
Enterprise Times: What this means for business.
Salesforce’s shopping data appears to be in line with other analyst reports that indicate a slow-down in consumer spending. Inflation is increasing in all markets across the globe. An inevitable consequence of rising inflation is less money in the pockets of consumers to spend. What’s interesting about the Salesforce sales data is the fact that they spent 6% more than last year. However, they are making fewer purchases.
This appears to indicate that consumers are going for quality over quantity. This will be good news for medium-range and luxury brands on the high street and online. President Biden has promised to lower costs for American families. How this will be achieved is unclear. Particularly since the war in the Ukraine is expected to drive energy costs up for all businesses around the globe. Businesses will have to continue to keep an eye on costs, to ensure it does not run away for their business.
