Black Friday, a day of massive in-store and online promotions, began Friday in the United States under the gaze of traders hoping consumers will be there despite persistent inflation and worries about the economic outlook. At Macy’s, shoppers are there, braving the cold that has hit the city to stroll the aisles of the famous New York department store between a Santa Claus surrounded by disco balls and a family of stuffed foxes. But experts remain cautious this year as inflation has heightened fears of retailers oversupply ahead of the holiday season.
Concerns were very different last year as the sector faced delivery difficulties due to the disruption in global transport and factory closures caused by the Covid-19 pandemic. “Yesterday the problem was supply shortages, today it’s too much,” summarizes Neil Saunders, managing director of specialist company GlobalData Retail. In his opinion, bargain hunters in many sectors, such as electronics or clothing, could benefit from the overflow of orders. “For this season, local retailers have to work a lot harder to end up with minimal profits,” he believes.
A trend that offers opportunities for consumers, like Carla Forbes, who started looking at the promotions a few weeks ago and ended up buying a jacket at Macy’s for $79 instead of $225, are the most interesting,” assures Ms. Forbes, but regrets it Promotions do not apply to consumer products on the rise. According to data collected by Adobe, online sales hit $7.28 billion late Friday and are expected to be between $9 billion and $9.2 billion by the end of the day, up about 2% from Black Friday 2021 is equivalent to. Between Thanksgiving Thursday and Cyber Monday, Americans are expected to spend a total of $36.4 billion on five-day online purchases, up 2.8% from the same period last year, Adobe forecasts.
Economies that are melting
The forecasts by Deloitte and the National Federation of Retail Trade assume that prices will rise below inflation, which in October was still 7.7% for the year. For Adobe, online sales this holiday season are expected to rise 2.5% this year, which is just a third of the increase from a year ago at this point and a sign of likely declining volume. Industry concerns are also reflected in Europe, where Black Friday has been popular for about a decade. Anne Campbell, a Scot visiting New York for a few days, finds the atmosphere very different from Britain, where concerns about the energy crisis and the ailing economy are high. “Times are tough for a lot of people in Britain,” she said, “by comparison, it’s clear that people here are still spending heavily.”
So far, American consumers have proved resilient to the various crises since the pandemic began, spending more than expected, even as confidence indicators underscored their concerns. Part of the explanation can be found in unusually resilient savings, as many households turned to government aid during the pandemic when consumption was at its lowest due to health restrictions. But the cushion is starting to recede: After peaking at $2.5 trillion in mid-2021, US savings fell back to $1.7 trillion a year later, according to Moody’s. And consumers with annual incomes of less than $35,000 are the first to be hit, as their savings fell 39% in the first six months of the year. As a result, consumer credit is increasing, according to Federal Reserve data.
A high-contrast image
Quarterly results released by retailers showed a mixed picture of consumer health. The Target chain took the hit as it faced a sharp drop in purchases in October, hinting at a bad holiday season, expecting a “very promotional” time and “very cautious” customers, according to general manager Brian Cornell.
However, sentiment is very different at decorating competitor Lowe’s, with a “solid” third quarter and no slowdown expected. “We’re not seeing anything resembling a drop in buying,” said chief executive Marvin Ellison.
In any case, the crowd of buyers on the streets of New York was more compact than it was a year ago, assures Marvin Thomas after buying a cap in the sale. Inflation is “a big problem, he says, I won’t deny it affects me, but we have to deal with it”.
Black Friday, a day of massive in-store and online promotions, began Friday in the United States under the gaze of traders hoping consumers will be there despite persistent inflation and worries about the economic outlook. Shoppers are there at Macy’s, braving the cold that has descended on the city to stroll…
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