US retailers are bracing for a slower-than-normal Black Friday as high inflation and sagging consumer sentiment erode Americans’ demand for material goods.
(Bloomberg) — US retailers are bracing for a slower-than-normal Black Friday as high inflation and sagging consumer sentiment erode Americans’ demand for material goods.
After adjusting for inflation, seasonal sales are likely to fall 1.2%, the first decline since 2009, according to S&P Global Market Intelligence. At the same time, there’s a lot of nuance to be gleaned from companies’ earnings reports in recent weeks. It’s clear that shoppers are willing to fork out cash, if the price is right. A buildup of inventory has forced companies into widespread markdowns — a move that hurts profits but appears to be drawing in discount-hunting consumers.
At the same time, companies from Nordstrom Inc. to Kohl’s Corp. have noted weaker performance in late October and earlier November. If that trend continues, a stock rally that has bolstered the industry in recent weeks could prove short-lived.
Bloomberg News will be following the latest developments as information becomes available throughout the day. All time stamps reflect the US East Coast.
Fewer Gifts Expected Amid High Inflation (7:34 a.m.)
Inflation, not the Grinch, is stealing Christmas this year. More than half (51%) of the 1,000-plus respondents to a RetailMeNot holiday trends survey say they’re coping with sky-high inflation this year by purchasing fewer gifts.
Polled shoppers plan to spend $725 for the holidays — 8% less than last year. More than a third (36%) say they’re going to use more coupons to manage higher prices. And 22% say they’re going to purchase more used items.
RetailMeNot’s data also show that 53% of respondents plan to shop on Black Friday and 55% will shop Cyber Monday. Many consumers have already started, with 52% taking advantage of pre-Black Friday deals.
E-Commerce Growth Seen Slowing (7:34 a.m.)
Retailers’ digital sales remain higher than in 2019, but growth has decelerated from the past two years, said David Bassuk, global co-head of the retail practice at consulting firm AlixPartners. Consumers are still using online channels to get a sense for what deals are available, but that won’t be the only option this year.
“The stores are back,” Bassuk said. “The importance of the sales associate in the store is increasing once again.”
Black Friday Minus Thanksgiving: UK Stays Active (7:02 a.m.)
With inflation running at the highest in more than four decades in the UK, shoppers are actively looking for bargains this Black Friday. Almost 70% of British shoppers plan to participate in the discount event imported from the US, up from 57% last year, according to McKinsey & Co. Online searches for Black Friday sales have risen by a quarter since last year.
With most people in the UK not celebrating Thanksgiving, Black Friday has morphed into a weeklong and in some cases a monthlong event. It started even earlier than normal this year as retailers try to encourage shoppers to spend. British department store John Lewis Partnership Plc and drugstore chain Boots both offered deals from the start of the month.
Adobe Sees 2.5% Growth — Without Inflation (12:01 a.m.)
A key question this Black Friday will be how much higher prices are contributing to better sales numbers.
Overall spending this holiday season is seen growing 2.5% from a year ago, compared with 8.6% last year and a whopping 32% in 2020, according to data from Adobe Inc. Those figures aren’t adjusted for inflation, meaning that sales could be down by volume given that consumer prices are up 7.7% from a year ago.
Telsey Sees Profits Amid Discounts as Key (12:01 a.m.)
Success for retailers this holiday season will be determined by which companies can maintain their discounts and still come out profitable, said Dana Telsey, chief executive officer of Telsey Advisory Group, in a Nov. 23 interview on Bloomberg Television. There’s still more inventory “to get through as we enter the holiday season, which is going to lead to good deals and good values for the consumer,” she said.
Telsey also said that brick-and-mortar sales are likely to get a big boost this year because “we have not had this type of in-person shopping for two years during the holiday season” due to Covid-19.
–With assistance from Tonya Garcia, Daniela Sirtori-Cortina and Katie Linsell.
(An earlier version corrected a month in the introduction.)
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