Inflation plays a key role in the 2022 shopping season, in the form of high costs for retailers that translate into price increases for consumers – according to a report by Salesforce that examined what was expected in the strongest sales months of the year, November and December.
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Salesforce, which specializes in the cloud and corporate customer relationship management software, analyzed the activities of more than a billion consumers in about 60 countries, and focused on 12 key markets, including the US, Canada, the UK, Germany, France and Japan. According to the company’s data, this year The prices are 7% compared to 2021, and 15% compared to 2020. The number of online orders is expected to decrease by 7% compared to the corresponding period in 2021, but from a financial point of view it is a decrease of only 2%.
Sales are expected to total $1.12 trillion ($265 billion in the US, where the trend is reversed and a 3% increase is expected). This figure is based in part on sales that have already taken place: it turns out that this year many consumers did not wait for Black Friday, which will take place this Friday. In fact, inflationary pressure has caused many to start shopping earlier than usual, and according to Salesforce, 29% of sales were recorded in the first three weeks of November – a 5% increase compared to 2021.
“People are afraid to wait until the 90th minute,” says Noam Ezra, regional sales director at Salesforce Israel. “Their fear is divided into two: that prices will rise, and longer delivery times. In the past, the sellers would commit to delivery within two days, today they don’t. What’s more, this year people are more looking for things they need, and not the extra things.”
“Price increases almost everywhere in the world significantly reduce our ability to buy. On the other hand, the volume of purchases is increasing. People are increasing their shopping baskets, and you can see that many people are already doing their Christmas shopping.”
Although the physical stores maintain their status, the Corona years also took their toll, and online shopping is on the rise. “The customers are trying to lower the level of friction, online no one drives them crazy, and the retailers understand that,” says Ezra.
“At the same time, they feel the pressure on profitability, which is now in doubt due to the increase in labor wages, fuel prices and supply costs. In fact, because the retailers and companies and websites have to invest quite a bit in the supply chain, 10% of their profits are already at risk. Therefore, it is critical for them to reduce costs through processes Automation, logistics and digitization”.
In Israel: reducing expenses
Along with global inflation, Israel is also faced with the cost of living, which puts into question the extent and type of purchases expected throughout November, and on Black Friday in general. In Israel there is a high awareness of the days of the great deals, and to be more precise it is 95%, as shown by a survey carried out and analyzed by Dr. Dana Tevet, an expert in consumer behavior from the Arison School of Business Administration at Reichman University.
The survey, which was conducted through the online panel of respondents Panel4all, was carried out among 495 respondents in a representative sample of 18 and over that includes the Arab society, showing that three out of four Israelis who are familiar with the shopping days intend to buy during them. By day, it was found that the most popular shopping event is Black Friday (41% indicated that they would shop on this day). 28% of the respondents stated that they will purchase on more than one day, and 6% intend to make purchases on each of the shopping days.
While last year 18% stated that they did not intend to buy anything during the November shopping days, this year it is already 26%. Surprisingly, only 5% attributed it to not having money. Other reasons were I don’t need anything (41%), I prefer the physical stores (17%), the events don’t excite me (17%), the promotions are not attractive (10%), and I’m tempted to purchase more than I planned (5%).
Dr. Dana Tevet, Arison Business Administration, Reichman University / Photo: Raanan Cohen
As for the amounts that the respondents intend to allocate for the shopping days, 71% stated that they will allocate similar or lower amounts compared to last year. 26% of them state that they will not purchase at discounts less than 41%-50% of the original price. 23% will not buy with discounts less than 31%-40%. The rest settle for lower discounts. “The full picture will of course become clear when the shopping specials are over, but what is clear is that the public wants to see real specials, and not ‘so-called’ specials where the discount is negligible,” notes Tevat.
An interesting figure for local businesses indicates that 51% would prefer to purchase on Israeli websites, while only 18% prefer to buy on international websites. 31% have no specific preference. “The Israelis prefer local sites for functional considerations of ease of return, product liability and language barriers,” says Tevet. On the other hand, the advantage of international websites comes from more attractive offers and prices (71%).
Buy in both channels
During the corona, the position of the online sites strengthened, and some saw this as a threat to the physical stores. However, the retail companies’ reports for the third quarter, published this month in Israel and internationally, indicate that the strategic plan should include both channels, and those who bet on only one of them may lose.
A similar trend emerges from the survey conducted by Dr. Tevet: 68% of the respondents said that they are interested in purchasing during shopping days both in physical stores and online. 19% would prefer only the Internet, and 13% would prefer only physical stores.
“In order to compete in e-commerce and attract buyers to the sales floor, physical stores should offer an extraordinary shopping experience, unique promotions that do not exist online, initiate collaborations between stores and special events for customers, and more,” says Tevat.
Car spare parts in first place in the world, in Israel market education is still required
One of the most popular shopping sites in Israel is ebay, which offers products in many categories. According to the company’s data, the leading categories for 2022 among Israelis were spare parts for cars and bicycles, fashion, jewelry and watches. The markets from which the most products were ordered are the USA, China, Great Britain, Germany and Japan.
According to Mickey Sokolowski, Director of Marketing and Communications for Emerging Markets across EMEA, “Spare parts are the largest category on eBay globally. It’s a huge market, which grew even more during the Corona period due to a crazy shortage of new components, and because of a difficult production problem. Even the car companies had to buy parts Replacement from sub-suppliers, due to lack of chips and materials and slow shipping.
“This is a field in which there are not enough ‘educators’ in Israel. You come to the garage, and they can tell you whatever they want, you have no idea what they did to your car. If people had more knowledge and patience, they could order the part, come to the garage just for installation and save 80% of the costs. In Israel they are not aware enough of this, but sellers in the Baltic countries and Eastern Europe generate huge turnovers only in this area.”
According to a survey carried out by the company in the USA, a 15.5% increase in the amount of orders is expected in November and December, and the total purchases will amount to approximately 236 billion dollars.