Can you hear those sleigh bells ringing? It’s that time of year again. Christmas is almost here and the holiday shopping season is at another peak. With plenty of question marks still hovering around the Omicron variant and how it will affect the upcoming holidays, for many of us it is still uncertain whether this will be a stay-at-home Christmas or not. Either way, the tradition of gift giving is stronger than any virus, and it is safe to say that presents will be given, no matter where the celebrations will be taking place.
Retail: The aftermath of November, e-commerce month
In recent years, November has been established as an international shopping month. It started with Black Friday, the traditional shopping event that takes place the Friday after Thanksgiving, and is considered the beginning of the holiday shopping season. In subsequent years, other days dedicated to shopping have emerged, such as Cyber Monday and Chinese Singles’ Day.
November 2021 continued this trend, and statistics show that shoppers are spending more each year. According to the BRC/KPMG Retail Sales Monitor, shoppers spent 5% more in November 2021 than they did the previous year. Last year, pandemic lockdowns were in place worldwide, and 71% of non-food shopping took place online. This year, although shoppers spent more all in all, they actually spent less 17.9% online and more in-store than they did the previous November.
Another reason for the rise in in-store sales is the supply chain crisis. Shoppers preferred the certainty of buying in-store rather than waiting for shipments that might not arrive in time for the holidays. While Amazon remains the preeminent e-commerce retailer, department stores Macy’s and Kohl’s had a banner year and absolutely crushed earnings in Q3.
Will there be an increase in holiday travel?
The simple answer is, we don’t know yet. Many governments added new entry requirements and other restrictions when the COVID-19 Omicron variant was discovered in South Africa. Growing concerns over an increase in cases are taking their toll on the travel sector. However, early reports on this new coronavirus variant appear to indicate milder illness than Delta, with travel stocks such as Carnival Corp. and Norwegian Cruise Line regaining ground lost earlier this month as the initial panic subsided.
Inflation and the rising costs of food
The international food and grocery retail market value is growing rapidly and is predicted to reach $17.3 trillion by 2027 at a compound annual growth rate (CAGR) of 5%, according to a report by Grand View Research. The holidays always mean big family meals and increased food budgets — but there are also plenty of companies in this sector competing for consumers’ food dollars.
According to the US Consumer Price Index (CPI), food prices rose 6.1% over the year. Groceries are getting more expensive, due to the supply chain crisis and the rising costs of labour, and consumers are having to adjust to this new reality. As prices rise, food companies to come out on top will likely be those that have strong brands plus the scale to keep costs low. While General Mills, ConAgra and Nestle are some of the major players in the food industry, growing companies in specialised sectors such as the plant-based Beyond Meat and health food grocery chain Sprouts Farmers Market are worth considering as well.
Innovative investment strategies for uncertain times
As COVID restrictions are being renewed all over the world, there is still a lot of uncertainty around the upcoming holidays. But with inflation rising and prices soaring, we can probably expect them to be expensive.
Seasoned investors know that diversification is one of the best investment strategies which has stood the test of time, particularly when markets are unpredictable. If you are looking to add built-in diversified exposure to the retail, travel and food sectors, you may want to consider eToro’s innovative Smart Portfolios. ShoppingCart, TravelKit, and FoodDrink offer ready-made balanced portfolios, designed by financial experts to include the world’s top brands for each sector and their related industries.