Global merchants are looking forward to a surge in consumer spending as Black Friday marks the beginning of the crucial holiday buying period. This comes amid economic challenges impacting households in regions such as the United States, Europe, and beyond.
The rise in living costs and elevated interest rates are constraining customers, leading to the slowest growth in U.S. holiday expenditures in half a decade. Consequently, many prominent retailers have reduced their hiring for the season.
Jessica Ramirez, a leading research analyst at Jane Hali & Associates, notes, “Shoppers are exhibiting caution, and any increase in holiday sales is likely to stem from inflation-driven price hikes.”
According to a National Retail Federation survey of 8,424 adults conducted in early November, American consumers are expected to spend an average of $875 on holiday shopping, which is $42 more than the previous year. The primary items on most wish lists include apparel, gift cards, and toys.
A record-breaking 130.7 million individuals in the U.S. are anticipated to engage in both in-person and online shopping on Black Friday. This event is famous for its early morning crowds at major retailers, eager for deals on electronics and home appliances.
However, a Walmart in New Milford, Connecticut, witnessed a relatively empty parking lot at 6 a.m. on Black Friday. Theresa Forsberg, a regular Black Friday shopper, observed that it was noticeably quieter than previous years. Similarly, in Manhattan, Macy’s flagship store drew early lines of shoppers, and the store celebrated their arrival with music and applause, offering discounts ranging from 50% to 65% on various items.
Black Friday, originally an American tradition, has gained international popularity and expanded to the online shopping realm.
In European countries like France, Italy, and Spain, clothing tops the list of Black Friday purchases, followed by electronics, as per a PwC survey. French shoppers, for instance, are expected to spend an average of 295 euros, with a significant portion of purchases occurring online.
In the UK, data from Barclays reveals a modest 1.4% increase in spending compared to the same period last year.
Retailers, including Macy’s and Amazon, now start offering deals as early as October, diluting the significance of Black Friday as a singular event. Macy’s CEO Jeff Gennette shared this trend with investors recently.
Most U.S. stores remained closed on Thanksgiving but reopened early the following day.
Retailers like Kohl’s and Nordstrom informed investors about their focus on winter apparel to attract holiday shoppers. Macy’s also highlighted substantial Black Friday discounts on its website.
Despite the economic pressures, traditional retailers like Walmart, Lowe’s, and Home Depot are sticking to their significant markdowns for the Thanksgiving weekend.
The willingness of consumers to spend amidst inflation concerns remains a critical question for retailers. Mari Shor, a senior equity analyst at Columbia Threadneedle Investments, pointed out that certain popular categories from past Black Fridays are now suffering due to decreased discretionary spending.
For example, Best Buy is offering substantial discounts on various electronics, following their announcement about consumers delaying big-ticket purchases.
Luxury spending downturns have led department stores, including Bergdorf Goodman and Nordstrom, to offer significant discounts on high-end items. Pete Nordstrom, Nordstrom’s President, discussed adjusting their inventory to match demand.
Finally, mall operator Westfield anticipates a higher number of visitors in its UK shopping centers this year, as reported by Katie Wyle, head of shopping center management UK at Unibail-Rodamco-Westfield.
