US shoppers kick off holiday season with muted Black Friday

US RETAILERS discounted heavily on Black Friday (Nov 25) to clear out bloated inventories but customers responded with only modest traffic, leaving profitability in doubt for many chains.

Crowds were thin in the late morning at Connecticut’s Stamford Town Center mall, with few shoppers at Kay Jewelers and just a small line at Forever 21. A couple at a Walmart supercentre near Dallas revelled in the lack of crowds as they bought presents for their grandchildren. At the Stonestown mall in San Francisco, shoppers were few and far between. 

“It feels like a normal day,” said Miguel Martinez, a warehouse supervisor walking through a Target store on Chicago’s North Side with his 12-year-old daughter, Jaylen. Martinez said he had been cutting back on cable TV and Netflix to afford presents for his four children. He described the Black Friday discounts as “pretty good” as he picked up a couple of Amazon Echo Dot speakers, Nerf guns and a Disney Encanto doll.

Brick-and-mortar retailers, which were hit hard by Covid-19 closures and shoppers seeking to avoid the virus, saw in-store traffic tick up 2.9 per cent this Black Friday compared to 2021, preliminary data compiled by Sensormatic Solutions showed. 

Enclosed mall traffic increased 1.2 per cent and traffic to non-malls, such as strip centres and standalone stores, increased 4.7 per cent compared to Black Friday 2021, the data showed.

“The pandemic-driven trend of shopping in unenclosed shopping centres has endured and malls are seeing resurgence as well. Our data shows consumers continue to enjoy the benefits of the brick-and-mortar shopping,” said Brian Field, global leader of retail consulting and analytics at Sensormatic Solutions.

While US consumers are still spending, they are growing more cautious after contending this year with the highest inflation rates in four decades. They are also keeping a sharper lookout for deals, and retailers – many of them still heavy with inventory after misjudging an erosion in demand – are trying to stand out by dangling the deepest discounts since before the pandemic.

The US holiday shopping season is likely to see modest to breakeven growth in annual sales, said Melissa Minkow, director of retail strategy at digital consultancy CI&T. “That’s still a win,” she said, contrasting the outlook with the UK, where high inflation has caused consumers to pull back noticeably on spending. Still, the steep Black Friday discounts are likely to squeeze retailers.

“Profits will not be where retailers want them to be,” Minkow added. That is in part because they “couldn’t pass all of the inflationary costs off to consumers.”

E-commerce spending on Black Friday rose 2.3 per cent to US$9.12 billion, according to Adobe Analytics. 

That is far less than the US inflation rate of almost 8 per cent during the 12 months ended in October. Salesforce said the average consumer discount on Black Friday was expected to be greater than 30 per cent, up from 28 per cent last year and close to the 33 per cent rate in 2019. The biggest discounts were in home appliances, apparel and health and beauty.

Shoppers are cutting back in reaction to higher prices, said Rob Garf, Salesforce’s vice-president of retail. “People are just plainly buying less products because their dollar isn’t going as far as it used to.”

At Crossgates Mall in Albany, New York, low-cost brands and higher-end buzzy retailers had the most foot traffic, while the middle-market stores were desolate. 

Gap’s Old Navy, which was offering 60 per cent off most items, had a line so long that some shoppers turned around as soon as they entered the store. 

Drawing big crowds at the higher end were athleisure favourite Lululemon Athletica, which had only a few racks of discounted merchandise, and American Eagle Outfitters’ Aerie, a popular intimates brand among Gen Z shoppers. Meanwhile, Gap’s Banana Republic, Macy’s and Urban Outfitters had no lines at all, and only a handful of shoppers. 

The healthy traffic at some retailers shows that many US consumers are still spending at a robust clip. US retail sales on Friday were up 12 per cent year-over-year, excluding automotive, according to Mastercard SpendingPulse, which measures in-store and online purchases across all forms of payment. The spending increase is not adjusted for inflation. 

At a crowded Best Buy store near Dallas-Fort Worth International Airport, half a dozen cars pulled up by the door to pick up large televisions and other electronic goods.

Grapevine Mills, a nearby discount mall, was so crowded that Shawanda Miller threw up her hands and left. “I don’t even want to talk about it, it was so crowded in there,” she said. “I’m going to come back another day.”

But crowds like that appeared to be an exception. The checkout line at the toy section at a Macy’s in Stamford, Connecticut, had no wait and the cashier said the store had prepared for more shoppers. A Walmart in suburban Dallas also had cashiers standing at the ready with no lines, which was just fine with Veronica Gonzalez and Carlos Garcia, a couple visiting from Corpus Christi, Texas. 

“What’s good about it is you don’t have to come in at 5 o’clock in the morning, and everything is here that we’re looking for,” Gonzalez said. Garcia said “everything’s for the grandkids” as he pushed a shopping cart full of bed sheets, suitcases and toys. 

The era of Black Friday crowds came to a halt with the pandemic, and it probably is not coming back as more consumers shop online and spread their spending out over a longer period. “The historic raucous atmosphere of Black Friday may be in the past,” Edward Yruma, a retail analyst at Piper Sandler, said in a report.

Behind the moderate crowds are people such as Therese Pociask, 60, who was shopping at Target in Chicago for her small day-care centre. She was also looking for gifts for her nieces and nephews. In her cart were an Epsom-salt gift pack, Fujifilm Instax camera film, three stuffed dinosaurs and a puzzle.

Pociask said she planned to spend about US$2,000 during the holidays – about the same as last year. But with inflation high, her money is not going as far as it did. “I’m trying to stay within my budget, but I’m finding I have to spend more for it to look the same,” she said.

Canadian e-commerce firm Shopify said its Black Friday sales hit a record of US$3.36 billion this year, marking a 17 per cent growth from the 2021 edition, with apparels & accessories featuring among the categories most sought by consumers.

“The weekend that started it all is still one of the biggest commerce events of the year, and our merchants have broken Black Friday sales records again,” the company’s president Harley Finkelstein said in a statement.

Merchants saw sales peak at US$3.5 million per minute, with cross-border orders representing 15 per cent of total sales, Shopify added, citing London, New York and Canada as top-selling cities.

Some consumers are hoping for even better deals on Nov 28 – or Cyber Monday. The biggest online shopping day of the year is poised to generate US$11.2 billion, up 5.1 per cent from last year, Adobe said.

“Cyber Monday will offer the best deals for computers (27 per cent), as well as furniture (11 per cent). Those looking to buy an appliance should consider waiting until Thursday (Dec 1), when discounts are set to peak at 18 per cent on average,” it said. BLOOMBERG


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