The Israel-Hamas war and threats of a U.S. government shutdown could cause some consumers to spend more cautiously, experts say, though they see more impact from the resumption of student debt repayments and high gas and grocery prices. Still, online retailers may want to adjust their marketing strategies in light of the negative news.

Ecommerce has been humming along this year, and most forecasts foresee at least modest growth during the holiday season. But will those forecasts have to be revised given the dire news of recent weeks, notably the Israel-Hamas war and the threat of a government shutdown in Washington?

Most online retailers and ecommerce analysts contacted this week by Digital Commerce 360 expect limited impact from the troubling international and national news. Instead, they say there may be greater impact from developments with more immediate effects on consumers’ pocketbooks, such as the resumption of student debt repayments and persistently high grocery and gas prices.

Both types of bad news tend to sour consumers’ outlooks. And that suggests online retailers may want to move forward holiday sales and take other steps to reinforce sales, some of these industry executives say.

Chaos in the news seems to be a near constant. When that chaos doesn’t impact kitchen table discussions, American consumers are pretty resilient against it.
Brad Scott
Halstead Bead Inc.

Understanding holiday ecommerce trends

Among those who believes the impact of recent news will be muted is Brad Scott, director of finance at Halstead Bead Inc., a retailer and wholesaler of jewelry-making supplies.

Brad Scott, finance director, Halstead Bead

Brad Scott, finance director, Halstead Bead


“Chaos in the news seems to be a near constant,” Scott says. “When that chaos doesn’t impact kitchen table discussions, American consumers are pretty resilient against it. When factors such as the price of housing, groceries, fuel, or health care start to impact a household’s budget, then we get nervous.”

Scott says Halstead Bead responded to the turmoil of the pandemic by bolstering its financial position. And that could give it an edge, if competitors cut back for fear of a sales slowdown.

“If we are able to maintain a consistent marketing presence when other businesses must cut back, our online visibility should improve,” he says. But, he adds, “More importantly, we must continue to serve our customers with the level of service they have come to expect from Halstead. It’s easier to keep a current customer happy than to find a new one.”

Consumers shop for value

Brad Wolansky, CEO of Dover Saddlery, says the Israel-Hamas war may dim hopes for a strong sales uptick generated by a positive September retail sales report. Dover Saddlery sells equestrian products online and in its brick-and-mortar stores. Now, he says, “I can’t see any reason for optimism in retail sales at this point, unfortunately.

Brad Wolansky, CEO, Dover Saddlery equestrian supplies ecommerce

Brad Wolansky, CEO, Dover Saddlery

“What we will see is a continuation of the malaise of the last 18 months whereby consumers will prioritize staples, and value-oriented shopping. Frankly I wouldn’t see a change needed to current marketing plans timing or content. Really, more of the same.”

Dover Saddlery is No. 707 in the Digital Commerce 360 Top 1000. The database ranks North America’s leading retailers and brands by online sales.

Coffee subscription e-retailer Bean Box Inc. has been projecting a strong season, based on having fully replenished inventory and introduced new products at a time when some competitors have purchased less in reaction to the ups and downs of the pandemic, says CEO Matthew Berk. And the e-retailer, No. 1329 in Digital Commerce 360’s rankings of North American retailers by web sales, has not lowered its forecast as a result of the recent news, he says.


“While overall demand might be softer, the game this year is to earn demand with new products and available inventory,” Berk says. But if demand signals around the Black Friday/Cyber Monday period are weak, he says, it might make sense for retailers to shift some of their marketing budget into early next year.

The impact of the resumption of student debt loan repayments

Nor has Calamity Worldwide LLC, an online retailer of gifts, tableware and apparel, lowered its sales projection for the season, says CEO Lynette Kelley.

Lynnette Kelley, business manager, Calamity Worldwide LLC

Lynnette Kelley, CEO, Calamity Worldwide LLC

“We think that consumers will still want to make purchases on our website, despite what’s going on in the world, because our items are like a treat or gift you can give yourself,” she says. “Our products’ uniqueness makes it feel special, and we think that during times of trouble, people still want to spend money on things that make them feel special.”


She says Calamity is adjusting its marketing by targeting lower-priced items to demographics impacted by recent events, such as millennials who must start paying off their student loans again, and higher-ticket items to more affluent shoppers. “We’re also going to push our value proposition—high-quality products, but with funny and unexpected designs—since we feel that sets us apart.”

Neil Saunders, managing director, retail, at Global Data, a marketing research and consulting firm, says a deepening of the war in the Middle East, should it occur, could dampen consumer confidence. However, he says, retail sales are more impacted by pressures on household finances.

“The resumption of student loan repayments has a more direct impact, but this was already integrated into our views on holiday spending,” he says.

He says shoppers already are spending cautiously, especially for big-ticket and nonessential items.


“Most retailers are starting the holidays and deals a bit earlier than usual, and this makes sense as they want to hedge against any slowdown later in the season,” Saunders says.

Discretionary categories are most at risk of losing sales

The resumption of student debt payments may impact the spending of some shoppers, says Sucharita Mulpuru, principal analyst at research and consulting firm Forrester Research Inc.

“I suspect maybe some of their discretionary items like eating out may decline but not enough to impact any category,” she says. “Electronics have been trending negatively long before September, and apparel has essentially been flat all year. I don’t see those trends changing.”

There’s not a lot online retailers can do in response to troubling news reports, Mulpuru says. But, she adds, it never hurts to try to increase sales. And retailers can do that, for example, by using the shopping cart page to encourage shoppers to add low-value items to the purchase.

Periods of geopolitical uncertainty lead consumers to cut back in discretionary categories, particularly related to travel, says Colin Sebastian, an investment analyst who covers ecommerce companies for R.W. Baird & Co.

“In more severe circumstances, we can also see a ‘cocooning effect,’ where people stay at home more,” he says. “This could benefit ecommerce a bit if that means fewer trips to bricks-and-mortar stores. But it might also mean consumers spending more time playing video games or watching TikTok and Netflix rather than going out to eat or buying clothes for a party.”

Online retail sales grow steadily in 2023

Until the news turned dark, there were strong signs for online retail sales, including in the U.S. Commerce Department’s report on September retail sales. That report showed nonstore sales, which are mainly online, grew 6.2% year over year. That compares with 2.8% for all other retail sales.


In the first half of 2023, U.S. online retail sales increased by nearly 8% year over year. While that was similar to the growth in 2022, it came after retail ecommerce revenue shot up during 2020 and 2021, the first two years of the pandemic, and those registered growth over a high base.

Throughout 2022 and 2023, online retail sales growth has outpaced total retail growth.


And that’s resulted in ecommerce penetration of over 21% in recent quarters. For comparison, the pre-pandemic peak was 17.3% in the fourth quarter of 2019. (The Digital Commerce 360 analysis of retail sales penetration excludes items not normally purchased online. They include vehicles, gasoline and spending at restaurants and bars.)

Even before the Israel-Hamas war broke out, forecasters had been factoring in consumer concerns over inflation and the possibility of a U.S. government shutdown. That led several analyst firms to make relatively modest forecasts for holiday-season growth. Estimates for online retail sales growth during the upcoming holiday season range from under 5% to as much as 15%.

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