NEW YORK, NY — This year’s Black Friday saw a notable change in consumer behavior and economic sentiment, as shoppers worldwide engaged in the annual retail event with less fervor than in previous years. Brokerage TD Cowen revised its U.S. holiday spending growth forecast from an initial 4% to 5% down to 2% to 3%, citing flat Black Friday traffic. Early discounts in October and November diminished the traditional rush and urgency associated with Black Friday.
David Klink, a senior analyst at Huntington Private Bank, highlighted the saturation in consumer electronics purchases. “There are only so many big-screen TVs and Alexa [Amazon voice assistants] you can buy,” he remarked. The bank holds shares in major retailers such as Walmart and Target.
Persistent inflation and high-interest rates have tightened budgets, leading to the slowest expected rise in U.S. holiday spending in five years. Retailers, anticipating these trends, have cut back on seasonal hiring and are prepared to offer extended discounts throughout the holiday season to manage inventory levels.
Despite the cautious approach of shoppers, some discount retailers like Target and Ross Stores reported strong quarterly performances. This indicates a sustained concern over inflation and living costs, even as recession fears diminish. Barbara Kahn, a professor at The Wharton School at the University of Pennsylvania, noted, “People are more value-conscious. They’re spending, but more conservatively.”
The National Retail Federation anticipates a record 130.7 million people shopping in stores and online in the U.S. on Black Friday. However, early morning observations at a Walmart in New Milford, Connecticut, and the Garden State Plaza mall in Paramus, New Jersey, revealed quieter scenes compared to past years.
The average U.S. shopper plans to spend about $875 on holiday purchases, up $42 from last year, focusing on clothing, gift cards, and toys. These findings emerge from a National Retail Federation survey of 8,424 adults conducted in early November.
While Black Friday originated in the U.S., its global reach and the rise of online shopping have lessened its impact as a singular shopping event. Adobe Analytics data showed that shoppers spent an estimated $7.3 billion online on Black Friday, a 7.4% increase from the previous year. Thanksgiving Day online sales reached $5.6 billion.
Jimmy Lee, CEO of The Wealth Consulting Group, observed a shift in consumer preferences towards online shopping. “The excitement of waiting in lines on Black Friday – there’s not as much of that anymore. A lot of people would rather just sit at home and look for deals,” he said.
Retailers, including Macy’s and Amazon, initiated promotional deals as early as October and are expected to offer more discounts as Christmas approaches. This strategic approach reflects a broader shift in retail dynamics, responding to evolving consumer behaviors and economic factors.