(Bloomberg) — It’s crunch time for U.S. retailers as masses of shoppers return to in-person shopping after the long, pandemic-induced hiatus.
This year is shaping up to be another record for overall spending. But there’s a long list of concerns, which have been reinforced in recent weeks by a series of uneven earnings reports. Will retailers have enough products to meet high demand as shipping containers pile up at ports? Will consumers be willing to pay more for their merchandise amid rising prices and scarce discounts? And will companies have enough manpower to handle the expected rise in spending?
We’ll be taking a look at the latest information as it becomes available through the day. All time stamps reflect the U.S. East Coast.
Smaller Crowds Mean Fewer Supply Issues (4:18 p.m.)
If the crowds are thinner this Black Friday, it might be for the best, said Simeon Siegel, a retail analyst at BMO Capital Markets.
“The chaos of past Black Fridays would actually be problematic given the inventory scarcity,” he said. “The reality is companies don’t have the units to see 2019 traffic.”
As the holiday shopping season progresses, Siegel expects to see a growing divide between retailers that effectively navigate the ongoing pandemic challenges of inventory and labor scarcity and price pressures — and those that don’t. “I think this is the very beginning of when we find winners and losers starting to emerge,” he said.
Some cracks are starting to show. Nordstrom Inc. and Gap acknowledged supply-chain issues earlier this week when they reported third-quarter earnings. Shares in both companies plunged. Other retail firms such as Capri Holdings Ltd., the owner of Michael Kors and Versace, and Tapestry, the owner of Coach, reported strong results for the most recent quarter. Executives said they had effectively stockpiled enough products to meet robust consumer demand during the holidays.
When it comes to retail, Siegel said, “the winners of Covid are going to be those who learned from Covid.”
Law Enforcement Patrols San Francisco After Recent Thefts (3:20 p.m.)
After a slow start, the streets of San Francisco’s Union Square were busy Friday with both shoppers and police officers.
The officers came from districts across the city to patrol after a high-profile string of robberies tore through several of the neighborhood’s luxury retailers last weekend. Three to four police officers were stationed at each corner, while others patrolled by car and by motorcycle or stood guard outside retailers like Nike, Apple and Macy’s.
Electronics, Video Games Are Top-Selling Items (3:12 p.m.)
According to Adobe, electronics and video games dominated the list of top-selling products bought online. Items included televisions made by Samsung and Vizio, Oculus Quest 2 — Meta’s virtual reality headset — and video game titles such as FIFA 22 from Electronic Arts and Ubisoft Entertainment’s Far Cry 6. Most-purchased toys included Legos and Rainbocorns.
Salesforce Says Shoppers Spent $5.8 Billion as of Noon (3:03 p.m.)
Shoppers have spent $5.8 billion online in the U.S. as of noon on the East Coast, according to data from Salesforce.com Inc. That’s a 7% increase compared to the same time in 2020. The rise is due in part to retailers sending out marketing emails and texts earlier on Black Friday after they noticed a more sluggish start to Cyber Week sales online, said Rob Garf, Salesforce’s vice president of retail. “It worked,” he said.
The most popular categories, according to Salesforce, are luxury handbags, footwear and home appliances. The ongoing demand for home goods is somewhat surprising, Garf noted, given surging sales during the depths of the pandemic.
The products shoppers are buying, though, are more geared toward thinking about welcoming guests back into their home, for instance. “We’re seeing the shift in the purchasing mindset from needs to wants,” he said.
The increase as of noon could signal that consumers are shopping earlier this year, rather than buying more. Earlier in the day, Salesforce estimated that Black Friday sales would reach nearly $13 billion, which would be flat growth compared to 2020. Online sales were particularly strong last year.
U.K. Spending Narrowly Rises From 2019 (3:02 p.m.)
The volume of payments in the U.K. on Black Friday far exceeded last year’s total and even outpaced the figure from 2019, according to Barclaycard Payments.
“As we reach the end of the Black Friday, it is great to see that the trend we have been seeing throughout the day has continued,” Rob Cameron, CEO of Barclaycard Payments, said in a statement. “This event remains a firm fixture in the annual shopping calendar.”
Still, the performance weakened throughout the day, at least on a relative basis. As of 1 p.m. local time, the volume of payments was up 4.2% from 2019, a figure that slipped to 2.4% by 5 p.m.
More Shoppers Choosing to Pay Later (1:32 p.m.)
Consumers are increasingly financing their holiday shopping with pay-later options and installment plans for their purchases.
On Thanksgiving, purchases in the U.S. using Klarna, one such app offering installment payments, rose 124% from a year ago. And as of 9 a.m. on Black Friday, sales on the app had gained 132%, Klarna said.
According to data from Salesforce.com Inc., shoppers used buy-now-pay-later options on 8% of all purchases in the past couple of days — up 31% from the previous year.
“Generally, because of rising costs, people are willing to pay more for a particular item,” said Garf, vice president of retail at Salesforce. “They want to buy early, but on the other hand, they are trying to be prudent with their budget.”
Stores Lack the Usual Crowds Early (12:29 p.m.)
Black Friday isn’t exactly causing a shopping frenzy inside many stores.
Parking lots for Macy’s and HomeGoods stores in Stamford, Connecticut, were less than full early in the day, while a Walmart location in Bedford, Texas, had no lines at the cash register and a modest number of shoppers. Similarly, a shopping center operated by Tanger Factory Outlet Centers in Fort Washington, Maryland, had few crowds in the morning.
At a Target store in the suburbs just outside New York City, Meliesha Francis, age 37, said the store had less than half as many people compared to past Black Fridays when she’s shopped there. She came for usual staples, like Huggies diapers, none of which were discounted. A trip to the Bed Bath & Beyond in the same shopping complex earlier that morning had proved equally fruitless. “There was only one set of curtains on sale,” Francis said.
Matt Shay, CEO of the National Retail Federation, said the lack of crowds could also be due to an earlier-than-usual start to the shopping season, something many retailers pushed this year because of supply-chain worries. “While historically we thought of Thanksgving weekend and Black Friday as the kickoff to holiday season, in many ways it’s now half-time.”
Foot traffic data isn’t yet available for Friday, and overall sales could still be elevated thanks to online orders or late-day shopping. After all, a lack of doorbusters mean shoppers don’t really need to get there early. Indeed, by midday at that Tanger Factory Outlet, police began limiting the number of cars in the lot.
Santa Comes Back, Socially Distanced (11:14 a.m.)
After taking a year off, Santa has returned to Macy’s in New York’s Herald Square, the nation’s biggest department store. But don’t expect to sit on his lap.
Santaland, which opened Friday after being a virtual experience last year, is now reservation-only as a way to maintain a Covid-safe experience, says Kathy Hilt, division vice president at Macy’s, who oversees the Herald Square location as well as other stores in the area. Reservations tend to sell out, she said, so families should book early.
“We also have reorganized the experience with Santa to make sure Santa and the guests are socially distant but still have the chance to interact with one another,” said Hilt, a 31-year veteran with the company.
Salesforce Flags Lack of Big Discounts This Year (10:01 a.m.)
Consumers are finding some of the least-generous Black Friday and Cyber Week deals on record because of inflation, robust demand and diminished product availability.
“These are some of the lowest average discount rates that we’ve seen in recent history,” said Salesforce’s Garf. Globally, the average discount on products purchased during the past couple of days is 24%. That’s lower than last year and below the average in recent years, too.
“If consumers see 25% off, they should feel really good about that,” Garf said in an interview. In previous years, shoppers could often snag a deeper discount if they waited to buy items after Cyber Monday, he said.
“This year, I’m cautioning and I’m encouraging consumers to not play the game of discount chicken,” Garf said. If consumers see a product that has a discount of as much as 50%, that’s probably because it’s only available in less popular colors or sizes, he said.
U.K. Spending Rebounds From Last Year (9:50 a.m.)
The volume of payments in the U.K. on Black Friday has jumped 23% from last year and 4% from 2019, according to Barclaycard Payments.
“Encouragingly, Black Friday this year is off to a strong start despite a challenging macroeconomic backdrop,” Barclaycard’s Cameron said in a statement. He said that spending declined last year amid pandemic restrictions.
Retailers’ sale volumes have recovered to pre-pandemic levels, he added.
However, consumers may not be getting many discounts — a recent survey from the British Independent Retailers Association showed that 85% of its members won’t be cutting prices because of rising costs and supply-chain disruptions.
Thanksgiving Spending Comes in at Low End of Estimate (9:42 a.m.)
The numbers are in for Thanksgiving online spending — and the total is the low end of expectations. Shoppers spent $5.1 billion on Thursday, according to the Adobe Digital Economy Index. Adobe’s initial prediction was for spending to be in a range of $5.1 billion to $5.9 billion, which was later lowered to $5.1 billion to $5.4 billion.
But Adobe reiterated its prediction that online spending from Nov. 1 through Dec. 31 will rise 10% to $207 billion, a record.
On Thanksgiving, the prevalence of out-of-stock messages fell to the lowest since June, Adobe said. That reflected efforts by retailers to focus their marketing efforts on in-stock merchandise amid global supply-chain hurdles.
PlayStation 5 Draws Crowds Amid Resale Frenzy (9:08 a.m.)
GameStop Corp. used the lure of Sony’s PlayStation 5 to generate buzz and foot traffic on Thanksgiving. The video-game retailer alerted shoppers early Thursday on Twitter that a limited supply of PS5s would be available at select stores.
That came after the chain hinted earlier in the week that it might have some PS5s for sale at select locations. A year after its release, the console is still hard to find because production has been slowed by a lack of microchips and supply-chain disruptions. On resale sites, the hardware is being offered at twice the retail price or more.
One father said on Twitter that he waited 30 hours in line at his local GameStop to nab a PS5 for his son.
Now, many hopeful consumers are waiting to see if other stores like Best Buy or Target release in stores as well.
Doorbusters Still Haven’t Come Back (8:45 a.m.)
The thinking last year was that the lack of doorbuster deals would be a one-time thing. So much for that.
With Covid-19 still lingering — and a new variant emerging — retailers have largely eschewed offers that would require customers to pack into stores to get them. But that doesn’t mean Black Friday sales have completely disappeared, noted Poonam Goyal, Bloomberg Intelligence retail analyst.
“What we don’t have again is doorbusters,” she said. “All the deals that are available in store are largely available online, which seems that you can go out if you want to enjoy the experience of Black Friday shopping but alternatively you can find everything still online from your home without stepping outside. I think online shopping will be a much bigger deal.”
Wall Street Worries About Black Friday Prospects (7:51 a.m.)
Investors seem awfully pessimistic heading into Black Friday.
Retail stocks are down pretty much across the board in premarket trading as U.S. chains start opening their doors to shoppers. Adobe may have spooked Wall Street after saying late Thursday that online sales on Thanksgiving likely came in lower than expected, while the rise of a new Covid-19 variant is also hurting stocks. Retailers have already been grappling with rising costs, stock shortages and a tight labor supply, so a decline in consumer demand would add to their woes.
Among the major names trending lower, Gap Inc. slipped 3.5% as of 7:51 a.m. in New York, Kohl’s Corp. fell 4.4%, Macy’s tumbled 5% and Bed Bath & Beyond Inc. was down 2.4%. Target Corp., Walmart Inc., Home Depot Inc. and Lowe’s Cos. were each down 1% or more. Mall-based chains similarly struggled, with Abercrombie & Fitch Co., American Eagle Outfitters Inc. and Tapestry Inc. also declining.
Adobe Lowers Spending Estimate for Thanksgiving (12:01 a.m.)
E-commerce spending by U.S. consumers on Thanksgiving Day will probably climb to a record — but sales may not be as strong as initially expected.
Consumers were on track to spend $5.1 billion to $5.4 billion online Thursday, according to an estimate from the Adobe Digital Economy Index. The top end of the estimate was lowered from a previous estimate of as much as $5.9 billion.
“What we’ve seen this afternoon is that we’re on a trajectory in which the Thanksgiving Day total will be closer to the lower half of our originally proposed range,” Taylor Schreiner, director at Adobe Digital Insights, said in a statement. “This can be attributed to consumers spreading out their spending across November, which has shown up in more $3 billion online shopping days thus far.”
Small Businesses Face Staffing Hurdles (12:01 a.m.)
Small businesses are feeling “pretty optimistic” about the holiday season, said John Waldmann, chief executive officer of Homebase, a software company that helps small businesses manage their teams. But challenges still loom, particularly in regards to staffing, he said in a recent interview.
About 35% of small business owners said they are looking to hire at least one seasonal team member. This means that some companies will be understaffed, some will be short on experience, and some will suffer from both problems, Waldmann said. He said that more than 60% of small businesses reported they’ll be paying workers more this year, compared with 2020.
Staffing shortages could mean a less-pleasant experience for shoppers. “Consumers, be patient and be kind,” he said.
Homebase recently surveyed 400 small business owners and 2,000 employees about their outlook for the holidays.
Macy’s CEO Talks Store Traffic, Staffing (12:01 a.m.)
Macy’s Inc. CEO Jeff Gennette said he doesn’t see Black Friday foot traffic bouncing back to pre-pandemic levels this year, adding that traffic at stores remains below what it was in 2019. More of those who go in are actually making a purchase, however.
Like the rest of the industry, staffing has been a challenge.
“We’ve got some stores in great shape and some stores that are really lean,” Gennette said in an interview last week. The department-store chain said earlier this month it would raise the minimum wage to $15 an hour by May. Because of seasonal challenges, that pay boost has already gone into effect in more than 100 stores for the Christmas hiring season.
Hiring has improved,“but we still have some gaps and open jobs,” he said. “We’re mitigating that by offering spot bonuses or premium pay for weekends. We’re offering our colleagues opportunity for overtime and working six days.”
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