Former Target Vice Chairman Gerald Storch has issued a warning about the upcoming holiday shopping season, citing inflation and dwindling savings as major concerns for consumers.
Speaking on Fox Business Thursday, Storch explained that many Americans are financially strained and may not be able to spend as much as in previous years.
“It’s very clear that consumers are running out of money,” Storch said. “They’re increasingly stressed by inflation and the exhaustion of their pandemic-era savings. Everyone talks about the consumer still spending, but they’re spending less than the growth of inflation.”
Storch predicts that holiday sales growth could be around 2.5%, which he considers weak compared to the 4% growth seen in better economic times.
He noted that the shorter period between Thanksgiving and Christmas, economic uncertainties, and geopolitical tensions could further dampen consumer spending.
“The time between Thanksgiving and Christmas is very, very short, so that’s going to be bad,” he explained. “The election’s going to weigh on things and the geopolitical situation as well, so I think it’s going to be a pretty weak Christmas.”
The retail sector is also facing difficulties with a surge in store closures.
Major chains like Walgreens are closing unprofitable locations—Walgreens alone plans to shutter 1,200 stores across the U.S. over the next five years.
UBS analysts have reported that up to 45,000 retail stores could close during that period.
“A lot of these retailers expanded very rapidly,” Storch said. “That big bet on physical locations came just as the consumer was slowing down, and, of course, the internet’s been growing.”
Recent data from the Commerce Department shows that retail sales rose 0.4% in September, slightly above the 0.3% forecasted.
However, year-over-year retail sales have increased only 1.7%, lagging behind the 2.4% rate of inflation. This means consumers are spending more money but receiving less in return.
“[Consumers are] spending more and getting less,” Storch noted. “Look at some of these numbers year-over-year: electronics and appliance stores down 4.6%, sporting goods down 3.5%, department stores down 1.2% less than last year—not even accounting for the 2.4% inflation increase. From my point of view, I don’t think this is very good.”
Economic challenges have been a big concern for many Americans.
Reports indicate that a majority of Americans are living paycheck to paycheck, with rising costs of everyday essentials such as food, rent, and electricity since 2021.
As the nation approaches the holiday season, both consumers and retailers are bracing for a period marked by financial strain and uncertainty.