Despite campaign promises to bolster the American economy, President-elect Donald Trump is already proving to be a bane to the retail industry.
In the week leading up to the election and immediately following, retail sales online experienced slumps. Analysts said while decreased spending is common around election times because shoppers are preoccupied with national affairs, this cycle is showing a particularly slow rebound—blame the appointment of the divisive Trump. Rather than shopping for gifts or gearing up for upcoming Black Friday deals, consumers are following the effects of the election.
“Consumers are distracted. They’re following public events, and they haven’t quite flipped the switch to holiday shopping,” said Becky Tasker, a managing analyst at Adobe Digital Insights.
According to data from Adobe Digital Insights, retailers lost an estimated $800 million in revenue from online sales between November 1 and November 14. The largest drop happened immediately after the election on November 8, when total sales growth slowed to 1.3 percent, versus the forecasted growth of 7.8 percent, which was based on past trends in holiday sales and the trajectory of spending this year.
The dip marks the slowest growth rate for retail sales that Adobe has seen since in the U.S. since 2012. Tasker said the election-driven slump in e-commerce sales rebounded significantly faster in 2012 than they have in 2016. “Here, we see more of a hangover effect,” she said.
In a statement, Tamara Gaffney, the principal analyst and director of Adobe Digital Insights, said consumer spending over the last two weeks mirrors spending in the aftermath of Brexit: Retail experienced a 0.9 percent drop in the month following England’s decision to split from the European Union.
“Similar to Brexit and its negative impact on consumer spending on durable goods in the U.K., U.S. consumers seem to be holding off spending more online. Instead of the expected 11 percent year-over-year increase, we expect growth to fall to single digits this year,” she said.
Tasker and Gaffney both said Black Friday and Cyber Monday performance will be telling of whether retail will make a strong resurgence after the slump.
Sucharita Mulpuru, chief retail strategist at Shoptalk, said major national events can change consumer shopping sentiments. In a survey she conducted of 1,500 online consumers demographically representative of the United States, Mulpuru found that 21 percent of shoppers estimated that they would spend significantly less this holiday season as a result of the presidential election and feelings of doubt.
“There’s uncertainty. You don’t know what you’re life predicament is going to be in the next few months, and I think that’s the reason for being a little more conservative [on spending],” she said.
Additionally, she said several shoppers may instead opt to use their disposable income for charity donations. Following the election of Trump, there was an outpouring of support on social media urging donations to organizations that support women and minority groups that may be threatened as a result of Trump’s appointment. They included Planned Parenthood, the American Civil Liberties Union and the National LGBTQ Task Force. Trump has been vocal about plans to deport illegal immigrants and build a wall along the southern border of the U.S. He has also been the alleged perpetrator of several cases of sexual assault and has made lewd comments regarding the female anatomy.
“It’s more of an existential feeling that the money you would’ve spent on Christmas gifts would be better spent aligning with charities of your choice,” Mulpuru said.
Furthermore, she found that among the individuals polled, subjects expressing the most uncertainty were in the Generation X demographic (those born between 1965 and 1980) and women, both of which hold significant spending power in the retail space. She said it’s difficult to tell the impact Trump’s policies will have on retail, but indications of interest in free trade restrictions point to the fact that it could be damaging—they include implementing tariffs on foreign imports and dismantling existing pacts with other countries.
“Many of his policies are not aligned to retail—starting with free trade restrictions, which would be catastrophic for retail if they’re put in place. It would increase input costs and decimate retail.”