Shoppers walk past sale marks as the Black Friday sale begins at The Outlet Shoppes of the Bluegrass on November 26, 2021 in Simpsonville, Kentucky.
John Cherry | reuters
Major retailers are under immense pressure to deliver on Black Friday, as many of them have reported declining sales during the do-or-die holiday shopping season.
Macy’s, target, Cole’s, gap And nordstrom Talked about a decrease in sales in late October and early November. Target cut its holiday-quarter outlook and Kohl’s pulled its forecast, citing slower sales. Macy’s CEO Jeff Gennett said shoppers continued to visit its stores and website during that lull, but browsing did not translate into purchases. best Buy CEO Corey Barry said buyers are showing more interest in the sale than usual.
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Those results reflect an emerging theme this season: Buyers are drawn to the biggest and best deals—especially when inflation hits their wallets.
“People are willing to wait and be patient,” said Rob Garff, vice president and general manager of retail for Salesforce, a software company that also tracks shopping trends. “The game of discount chicken is back and the consumer will ultimately win.”
The huge appetite for deals is fueling high expectations for a big Black Friday weekend. Many major retailers including Walmart and Target will be closed on Thanksgiving. Yet a record number of people — 166.3 million — are expected to shop during the weekend, which extends from Thursday through Cyber Monday, according to an annual survey by the National Retail Federation and Prosper Insights & Analytics.
That’s an increase of nearly 8 million people from a year earlier and the highest estimate since the NRF began tracking the data in 2017.
Retailers and industry watchers are expecting a more muted holiday season, driven more by higher prices than by a huge appetite for merchandise on sale. The National Retail Federation is forecasting a 6% to 8% increase in sales, including a boost from near-record-high levels of inflation.
Travel and experiences are competing even more for Americans’ wallets as concerns over COVID-19 fade.
Retail executives reporting earnings spoke of a shift from pre-pandemic styles of gift-buying. Over the past two years, consumers shopped earlier and gift-shopping sprang up due to concerns about shipping delays and out-of-stocks due to increases in online sales and congested ports.
This year, retailers once again start their sales early – but prepare them to sell excess inventory and serve a more value-oriented consumer. Amazon held a second Prime Day-like sale in October, and Target and Walmart held competing sales around the same time.
Yet so far, buyers have been Not in a rush to buy.
Best Buy CEO Barry said October sales were the company’s slowest this quarter compared to last year. The background is very different from a year ago, she said, when shoppers shopped early and were worried they might not get all the items on their wish lists.
“I don’t have the motivation to shop this year,” she said. “Your average consumer knows there’s a lot of inventory and it’s going to be competitively priced.”
She said Best Buy now expects customers to spend more during Black Friday, Cyber Monday and the two weeks before Christmas. The company has increased hours, staffed stores and even timed inventory to account for that schedule, she said.
Other factors may have dampened demand in late October and November as well. On recent earnings calls, executives at Gap and Nordstrom noted unseasonably warm weather in the fall, which may have prompted consumers to increasingly stay away from stores to buy winter coats or heavy sweaters.
At the same time, some Americans were tuning into the midterm elections — a highly competitive race that has consumed their attention and may have contributed to the economic uncertainty, said Chris Howers, an equity research analyst who covers the retail sector for JPMorgan. .
But, he said, the weak start to the holidays has also raised some alarms about consumer health. Retailers have been cautious when sharing expectations for the season — and they’ve alluded to consumers who are dipping into savings accounts and racking up credit card balances despite stronger results than feared for the third quarter .
“Not only do you have dollar transfers for travel and entertainment,” Horvers said, “you also have dollar transfers for necessities.”
Besides, that said, it’s not all good news if people show up for Black Friday weekend.
“If the consumer is responsive to promotions and stores this week, but stops spending shortly thereafter, it’s going to reinforce the concern that retailers already have that the consumer’s only shopping need is And is only going to buy if it gets a discount.”