Retail CFOs might have to consider price cuts this holiday season to entice budget conscious consumers

The holiday season is fast approaching, but many Americans are cutting back this year. And for CFOs, that could make for a challenging few months.

A new study of roughly 2,000 consumers’ holiday shopping plans from Morgan Stanley shows 37% of shoppers are planning to keep their holiday budgets roughly the same this year, even after a year’s worth of inflation, while 27% expect to decrease their spending. “This means that retailers will be competing for a budget pool that is similarly sized to last year and will have to offer competitive prices to entice shoppers to choose their products,” Morgan Stanley analysts led by equity strategist Michelle Weaver wrote in a Thursday note to clients.

To their point, some 69% of consumers surveyed said they are waiting to see discounts before they begin holiday shopping—and I mean serious discounts. “Shoppers are looking to see 30% discounts, on average,” Weaver wrote.

For CFOs who were planning to raise prices, it might also be time to rethink your options. Morgan Stanley’s study found that if retailers raise prices, just 14% of consumers would buy the same amount of goods, while 45% said they would buy “a little less” and 34% said they would buy “a lot less.”

“Consumers are sensitive to rising prices,” Weaver wrote of the findings.

The number of Americans who say they will forgo holiday gift buying altogether also rose significantly this year. Some 10% of consumers now say they don’t plan on doing any holiday shopping, up from just 7% in October 2021 and 8% in November of 2022. And when it comes to consumers making under $50,000 a year, a whopping 15% said they don’t plan on doing any holiday shopping this year.

The poor results from the holiday shopping survey is one of the reasons Morgan Stanley analysts have turned bearish on the consumer discretionary sector of the stock market. “The lower prices customers are looking for will weigh on company margins and earnings,” they warned.

Will Daniel
Will.Daniel@fortune.com

Leaderboard

Some notable moves this week:

Kelly Howe was named CFO of Markets Advisory at Jones Lang LaSalle Incorporated (NYSE: JLL), effective Jan. 8. Greg Conley, who held the position of CFO for both Markets Advisory and Capital Markets, will now focus on the role of CFO, Capital Markets. Based in Chicago, Howe will report to global CFO Karen Brennan. Howe joins JLL with more than two decades of experience from Boston Consulting Group, most recently serving as CFO for North America.

Hugh F. Johnston was named senior executive VP and CFO at The Walt Disney Company (NYSE: DIS), effective Dec. 4. Johnston is vice chairman and CFO of PepsiCo, where he has held numerous leadership positions during a highly successful 34-year career with the multinational food and beverage giant.

James (Jamie) Caulfield was promoted to EVP and CFO at PepsiCo, Inc. (Nasdaq: PEP). Caulfield succeeds Hugh Johnston who will retire from the company on Nov. 30. Caulfield has been SVP and CFO at PepsiCo Foods North America since 2019. He has been at PepsiCo for more than 30 years in several financial leadership roles.

Sameer Balgi was named CFO at Tubi (Nasdaq: FOXA, FOX), Fox Corporation’s ad-supported video-on-demand service, effective Nov. 6. Balgi joins Tubi from Amazon, where he was most recently CFO of Freevee and head of finance for Prime Video’s US Marketplace business. He began his tenure at Amazon in Amazon Music transitioning the business from transactional (mp3) to streaming.

Vinay Bassi was named CFO at CPSI (Nasdaq: CPSI), a community health care solutions company, effective Jan. 1. Bassi most recently served as CFO for the Audience Measurement division at Nielsen Holdings plc. He also served Nielsen in various senior operational and financial roles. 

David Y. Park was promoted to CFO at StepStone Group Inc. (Nasdaq: STEP), a global private markets investment firm, effective Jan. 1. Park will be succeeding Johnny Randel, who has served as CFO since 2010, and is retiring. Park is currently chief accounting officer at StepStone.

Craig Henderson was named SVP and CFO at PGT Innovations, Inc. (NYSE: PGTI), a national brand in garage door industries. Henderson has over 20 years of experience in finance leadership. Before joining PGT Innovations, he served in multiple financial leadership positions with Trex Company, Inc.

Big deal

Going deeper

Here are a few Fortune weekend reads:

"WeWork’s $18 billion bankruptcy is the last thing the reeling commercial real-estate sector needed" by Sydney Lake and Alena Botros 

"How the co-CEO of PayPal and Stripe rival Adyen is weathering a fintech bust that’s sent shares down 62%: ‘If you have some headwinds, you don’t change direction’" by Phil Wahba 

"Citigroup boss Jane Fraser’s ‘Project Bora Bora’ could reportedly see 10% of staff laid off at the Wall Street giant" by Chloe Taylor 

"Reversing your biological age could help you live longer—and reduce dementia and stroke risk. 8 habits to help flip the switch" by Erin Prater 

Overheard

"By establishing clear metrics and baselines for productivity, bosses can create a culture where flexibility is earned through demonstrated output and quality of work. This method transforms flexibility from a broad-brush entitlement into a dynamic reward, reinforcing a results-oriented mindset."

—Gleb Tsipursky, Ph.D., CEO of the boutique future-of-work consultancy Disaster Avoidance Experts, writes in a Fortune opinion piece about the strategy of merit-based work flexibility. Tsipursky writes: "It considers key performance indicators, project milestones, and the quality of outcomes to assess an employee’s effectiveness. The underlying message is clear: Deliver on your commitments, and you will gain the freedom to work in a way that best suits your life and work style."