Seemingly every year, forecasts come out toward the end of the summer that predict holiday sales will be down. That makes sense, given the current state of the economy, which has made many Americans very cautious about their spending.
When that’s the case, and people are worried about rising prices, inflation, and getting laid off, you would think they would be cautious with holiday spending.
In reality, Americans cannot resist Christmas. Even when they know it does not make sense to go into debt to buy presents, the vast majority of the nation ignores their concerns and focuses on delivering the best holiday season possible.
It’s easy to see why that happens, but it’s also preposterous. People know better, but they always spend more than they plan.
Every year, the National Retail Federation does extensive surveys to forecast consumer spending. In 2024, they expected a 2.5% increase in sales.
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“Core retail sales during the 2024 holiday season grew an unexpectedly high 4% over 2023 to a record $994.1 billion, coming in ahead of the National Retail Federation’s forecast,” according to US Census Bureau data.
That's a song it seems like we sing every year, but Christmas is a big time to bring back the classics.
This year, however, Walmart, Target, Amazon, and other leading retailers face another major problem — a potential lack of goods.
Image source: Shutterstock
Christmas store shelves could be barren
Retail chains generally plan for Christmas in the summer, right about now. When I used to run Time Machine Hobby, a massive toy store in Manchester, Conn., we met with all of our vendors in July and August, placing massive holiday season orders.
That's not fully happening this year, according to Hasbro CFO Gina Goetter.
“We're also seeing downstream impacts from trade uncertainty across the retail landscape. Many retailers are delaying holiday inventory builds and pushed shelf resets into Q3, both of which weighed on Q2 consumer products revenue and are requiring us to remain agile in the second half,” she said during her company's second-quarter earnings call.
Hasbro's CEO Chris Cocks noted that the toymaker was also taking a cautious approach.
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”It’s a little bit of a black box, [what] the back half of the year is going to look like. I think you’re going to see companies like us be cautious on our inventory,” he added.
Most toy companies traditionally beef up their inventory during the lead-up to the holiday season, as many retailers will be desperate for more merchandise come mid-December.
Will retail stores have toy shortages?
The CEO suggested people do some of their Christmas shopping now, advice which should be taken with some caution, given the source.
“A lot of hot products are going to likely be out of stock this holiday because we’re just not going to be able to replenish them because we didn’t have the upfront inventory for them. So, like a Play-Doh, Barbie, a Nano-Mals, a baby Evie – if you’re a mom or a dad, you’re probably going to want to go and buy that early,” he shared.
Retail expert and RetailWire Brain Trust member Paula Rosenblum shared a warning of her own.
“Toys don’t have a great margin on a good day, so overbuying ahead of tariffs isn’t a great idea. The payroll expense for re-packing any unsold goods is not something retailers are going to want to face, given that they’re already reducing store hours,” she posted on RetailWire.
GeorgeAnne Bender, another Brain Trust member, shared a more measured take.
“Will toy shortages ruin Christmas? Maybe for vendors and retailers, but I’m sure kids will survive. Some parents will run themselves ragged looking for the toy of the moment – that manufacturers will continue to heavily advertise – but others will find toys that are just as good,” she wrote.
Mohammed Amer, a retail consultant, shared how uncertain the season is.
“When Hasbro’s CEO calls the market ‘a black box' and Mattel cites ‘general uncertainty,' they’re essentially admitting they’re flying blind. With 78% of toy imports from China, the toy industry’s supply chain has a single point of failure. What’s worse is the cascade effect through decision-making nodes full of uncertainty and irrational system outcomes,” he posted.
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