In yet another indication that inflation concerns won’t go away, online prices increased 3.1 percent year over year and 0.8 percent month over-month in December, according to data from the Adobe Digital Price Index (DPI). Yet Adobe’s calculations seem timid compared to that of Salesforce, which said in its own recent report that inflation forced U.S. digital prices up 25 percent for the duration of the holiday season.
The news from both tech titans comes as the Bureau of Labor Statistics released its monthly report indicating that consumer prices rose by 7 percent in December compared to a year ago, the highest percentage jump since June 1982. This marked the third consecutive month of inflation over 6 percent.
According to Adobe, December’s price increases marked the 19th consecutive month of year-over-year online inflation and followed the record high of November 2021, when online prices increased 3.5 percent YoY.
“Inflation online is showing no signs of easing, as durable consumer demand is being met with the same, persistent supply challenges that produced over 6 billion out-of-stock messages online this holiday season,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “As consumers contend with higher offline prices for everything from gas to rent, they are finding that e-commerce is still a less expensive option when it comes to goods like toys, electronics and even jewelry.”
Apparel has been the biggest beneficiary of holiday inflation as it balances out increasing raw material and shipping costs, with prices soaring an estimated 16.6 percent this year (up 0.6 percent month over month from November). December was the ninth consecutive month where online prices had risen on an annual basis, which is atypical for a category that often sees consistent periods of deflation when seasonal discounts kick in.
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Comparably, The Bureau of Labor Statistics indicated that retail apparel prices increased a seasonally adjusted 1.7 percent in December from the prior month–its largest increase this year.
In December 2021, 12 of the 18 categories tracked by the Adobe DPI saw year-over-year price increases, with apparel rising faster than any other category. Price drops were observed in six categories: electronics, office supplies, jewelry, books, toys and computers.
The second-biggest price jump came in the tools and home improvement category. Prices were up a record high 7.1 percent year over year, and up 1 percent month over month. This marking the 13th consecutive month of online inflation as consumers continue to spend more in this category. Over the holiday season (Nov. 1 to Dec. 31), online sales in the category grew by 1.7 times pre-season (Sept. 2021) levels.
On a month-over-month basis, 13 of the 18 categories saw December price increases, with price drops observed in five categories, including toys, pet products, home/garden, computers and flowers/related gifts.
Price hikes power 8 percent online holiday sales boosts
While Adobe and Salesforce may have held differing opinions on the impact of inflation, they were more in alignment about overall holiday spending. The price increases contributed to U.S. consumers spending $204.5 billion online over the 2021 holiday season, up 8.6 percent year over year, according to Adobe. Similarly, the CRM giant tallied the e-commerce spending at $257 billion, an 8.9 percent increase over 2020 totals.
Salesforce indicated that luxury handbags and home furniture were the fastest-growing categories online. As consumers shifted their spending from needs to wants this holiday season, luxury handbags had the highest year-over-year global growth with a 45 percent increase in online sales. Home furniture and general footwear trailed closely behind at 34 percent and 32 percent growth respectively.
“Despite the lingering pandemic and countless obstacles such as supply chain logistics, low inventory, and fewer discounts, consumers flocked online to close out this holiday shopping season with a bang,” said Rob Garf, vice president and general manager of retail, Salesforce. “As we move into a new year, retailers must push their brands to platforms such as social, gaming, messaging and the metaverse to engage shoppers where they are discovering and buying products. They must also double down on efforts to reimagine physical stores to support continually changing digital experiences.”
Holiday spend pulled forward amid stockouts, total inventory shrink
Adobe said a record 38 days exceeded $3 billion in daily spend, up significantly from the 25 days this number was surpassed in 2020. as consumers spread out their shopping outside of big days like Cyber Monday and began earlier.
The weeks before Thanksgiving (Nov. 1 to Nov. 24) grew 19.2 percent year over year, while Cyber Week (the five days between Thanksgiving and Cyber Monday) was down 1.4 percent. The weeks following (Nov. 30 to Dec. 31) grew 5.6 percent, Adobe highlighted.
Salesforce seemed to back up Adobe’s assertions on shopping timing: 30 percent of global holiday sales were completed by Nov. 22, while Cyber Week generated just 23 percent of sales. As consumers missed online shipping cut-off dates and concerns grew around new Covid-19 variants, 23 percent of global digital sales were placed between Dec. 18 and Dec. 31.
“This holiday shopping season was the first time where big promotional moments like Cyber Monday and Black Friday took on less of the spotlight,” said Taylor Schreiner, senior director, Adobe Digital Insights. “Like we saw during the Covid-19 pandemic, e-commerce has become a ubiquitous daily activity and a flexible way for shoppers to navigate product availability and higher prices.”
Product availability, or lack thereof, was another major story from the 2021 holiday season, particularly as retailers have contended with congested ports, cargo delays and disruptions in overseas manufacturing. During the holiday season, Adobe said consumers saw over 6 billion out-of-stock messages online. This represents a 253 percent increase over the pre-pandemic 2019 holiday season and a 10 percent increase year over year.
Overall, holiday inventory shrank 2 percent (both global and U.S.) compared to 2020 due to the supply chain issues, according to Salesforce.
Based on Adobe Analytics data, the analysis covers more than 1 trillion visits to U.S. retail sites, 100 million SKUs, and 18 product categories: electronics, apparel, appliances, books, toys, computers, groceries, furniture/bedding, tools/home improvement, home/garden, pet products, jewelry, medical equipment/supplies, sporting goods, personal care products, flowers/related gifts, nonprescription drugs and office supplies.
Consumers spent $1.14 trillion online globally, Salesforce estimated, compared to $1.1 trillion a year ago.
In compiling its 2021 Holiday Shopping Report, Salesforce analyzed shopping data from more than 1 billion shoppers on the Salesforce Customer 360 platform, as well as activity across commerce, marketing and services used by 24 of the top 30 U.S. online retailers.