As the United States gears up for the Black Friday shopping festival, the National Retail Federation (NRF) anticipates a record number of consumers participating this year, with a significant focus on discounted items. This trend comes amid the backdrop of ongoing inflation and the dwindling effects of government stimulus measures.
The NRF's statistics reveal that U.S. holiday shopping sales in 2020 surged by 9.1% compared to the previous year, with an even more remarkable increase of 12.7% in 2021. However, in 2022, as inflation continues to rise, the growth in holiday sales is expected to slow down to a 5.4% increase year-over-year, still surpassing pre-pandemic growth rates.
The holiday shopping season, as defined by the NRF, spans from November 1 to December 31, covering Thanksgiving, Black Friday, Cyber Monday, Christmas, and New Year's.
This year, the Black Friday shopping festival commences on November 24, followed by Cyber Monday the next week. The NRF predicts that between Thanksgiving and Cyber Monday, the number of shoppers will reach a historic high, with more people seeking out bargains.
However, the overall holiday shopping season from November to the end of December is expected to see a lower year-over-year increase in retail sales compared to the past three years. With inflation persisting and government stimulus funds nearly depleted, American consumers are prioritizing more affordable goods.
The NRF forecasts that from Thanksgiving on November 23 to Cyber Monday on November 27, about 182 million Americans will shop in stores and online. This figure not only exceeds last year's 166 million but also sets a record since the NRF began tracking in 2017.
Of those planning to shop during this holiday season, 74% intend to do so between Thanksgiving and Cyber Monday, up from 69% before the pandemic. Black Friday is expected to be the most popular shopping day, with about 130 million people planning to shop. Cyber Monday ranks second, with approximately 71.11 million Americans preparing to shop.
The report also indicates that the extent of discounts is a major driving factor for consumers. A significant 61% of shoppers said they are shopping during this period due to the substantial discounts, while only 28% cited tradition as their reason.
Adobe Analytics predicts that during the holiday shopping season from November to the end of December, online retailers might offer discounts of up to 35%, considering the uncertain consumption environment and the continued rise in food and gasoline prices.
In the 18 categories of goods tracked by Adobe Analytics, toys, electronics, and apparel are expected to see the biggest discounts. Toys could be discounted by 35% off the regular price, electronics by 30%, and apparel by 25%, all higher than last year's discount rates.
Other items likely to see significant price reductions include sporting goods (24%), televisions (22%), and furniture/bedding (19%). Adobe Analytics expects that online sales of retail goods during the period from Thanksgiving to Cyber Monday could reach $37.2 billion, a 5.4% increase from last year, accounting for 16.8% of the entire shopping season.
For the entire holiday shopping season, Adobe Analytics projects that online retail sales in the U.S. will rise to $218 billion, a 4.8% increase year-over-year.
According to the NRF's forecast, combining online and in-store sales, this year's holiday shopping season's total sales are expected to be between $957.3 billion and $966.6 billion, a 3% to 4% increase year-over-year. This forecast does not include car dealerships, gas stations, and restaurants.
While there is an expected year-over-year increase, the growth rate for this year's shopping season is projected to be lower than the growth rates from 2020 to 2022, aligning with the 3.8% increase in 2019.
Jack Kleinhenz, the NRF's chief economist, noted that despite high inflation and rising interest rates, the financial situation of average American households remains stable. Consumers will continue to purchase various goods and services, albeit at a slower pace.
A survey by McKinsey & Company found that a significant 79% of American consumers plan to change their shopping habits this holiday season, opting for cheaper goods or foregoing purchases altogether. This percentage is a 5-point increase from last year.
The survey highlighted that although the current inflation rate in the U.S. has fallen from last year's peak, economic uncertainty and geopolitical tensions are influencing consumer sentiment. A notable 66% of consumers consider more affordable prices and discounts as their primary concern for this holiday shopping season, up from 59% last year.
The second and third most important factors for consumers are the availability of goods and convenience, with only 33% considering the quality of products as a primary factor.
Several New York City residents expressed dissatisfaction with high prices in interviews with the Financial Times. A technology consultant plans to reduce their holiday gift budget from $2,500 to $400, and another consumer intends to halve their Christmas shopping.
Despite the NRF's prediction of a record number of customers from Thanksgiving to Cyber Monday, major retailers like Target and Macy's are exercising caution, focusing their promotions on discounts.
During this holiday shopping season, Target plans to offer thousands of holiday gifts priced under $25. Brian Cornell, CEO of Target, mentioned in an interview with CNBC that American consumers are not only reducing discretionary spending but also cutting back on food, beverages, and other grocery items.
Target's third-quarter financial report for this year, released last week, showed revenues of $25.4 billion, a 4.2% decrease year-over-year. However, thanks to strong sales in beauty products, the net profit for the quarter rose to $971 million, a substantial 36% increase from last year.
