Black Friday crowds were expected to be bigger this year as shoppers hunt for deals. But holiday spending could be muted as consumers struggle with inflation.
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Financial hardship from months of wild inflation pushed shoppers armed with trimmed-down shopping lists to get out early on Black Friday looking for bargains.
“Before the pandemic, things were different,” said British tourist Arfan Mirza, who at 7:30 a.m. was already carrying three shopping bags around the Citadel Outlets in the City of Commerce in the Los Angeles area. “Now because the bills and everything is going up, even like your daily basics like food, so we are buying less now.”
The day after Thanksgiving is no longer the mall mob scene and bellwether of the gift-buying season it once was, knocked off its pedestal in the last decade by the torrid growth of e-commerce and ever-earlier discounting. The pandemic led to lackluster mall shopping and booming online sales in 2020 and 2021 when waves of the Delta and Omicron strains of COVID-19 kept holiday shoppers at home.
But in-person purchasing is expected to stage a comeback this Black Friday and during the rest of the winter spending season. For some people, hitting the stores — particularly after they’ve digested their turkey — is a family tradition they plan to embrace anew, consumer surveys show.
Citadel Outlets, a popular Black Friday destination, saw bustling crowds Thursday night, when many other malls were closed, as shoppers jumped on deals at stores open to shoppers eager to get an early start.
Still, retail experts are predicting a slower overall holiday sales season with shoppers tapping into savings, credit cards and home-equity loans to fund their annual spree.
All this matters because how freely shoppers spend is key not just to retailers’ profits but to the entire U.S. economy. Consumer spending on goods and services accounts for about two-thirds of U.S. economic activity.
And Americans are feeling squeezed by the soaring cost of nearly everything they buy as well as sharply higher interest rates.
Consumer confidence fell in the Conference Board’s most recent survey, and consumers “appear to be rebalancing their budgets and priorities by reducing their gift-giving circles to help offset the higher costs of non-gift items, in particular food,” said Lynn Franco, the nonprofit group’s senior director of economic indicators.
Nationwide, shoppers plan to spend about $1,455 a person this year, about the same as last year, according to a Deloitte survey. However, that will net about nine gifts on average, down from 16 in 2021, Deloitte said. Toy inflation means shoppers should budget 15% more on playthings this year, recommended Toy Insider.
Merchants are having to work harder to get consumers to open their wallets, with big markdowns and other incentives.
Consumers are being offered some of the “best holiday discounts we’ve seen on record,” said Vivek Pandya, lead analyst at Adobe Digital Insights.
Retailers are trying to offload excess inventory as well as drum up excitement and growth over the holiday shopping season as Americans are having to pay more in other parts of their lives for things like groceries, gas and housing, Pandya said.
But factoring in inflation, which is running at the highest level since the early 1980s, that discounted gadget may still cost more than it did last year.
Holiday spending online is predicted to surpass $209 billion this holiday season, compared with $205 billion last year, about 2.5% growth, according to Adobe’s holiday shopping trends report.
“That’s pretty remarkable, given the economic headwinds that many consumers have been facing,” Pandya said.
In the first three weeks of November, shoppers had already spent $64.59 billion online, according to Adobe Analytics. Although up only 0.1% from the same period last year, the “minor uptick ... shows that despite a challenging spending environment [persistent inflation, rising rates], consumers still have a strong appetite for holiday shopping,” Adobe said.
Most shopping still happens in brick-and-mortar stores, but that data trickles out more slowly. The National Retail Federation predicts holiday spending could reach $960.4 billion, with nearly three-quarters of the total at physical stores.
There doesn’t appear to have been a return to the pre-pandemic Black Friday of lining up at stores in the pre-dawn darkness. But shoppers managed to get their spend on soon after doors opened.
Downtown San Francisco was dark and deserted at 6 a.m. But as the sun rose in the Bay, small groups of people trotted toward the doors of clothing stores lining Market Street.
Mark Huland, 40, stood outside Old Navy decked out in a 49ers hat and a sweater to match. He was eyeing a denim jacket through the glass windows.
“I can buy the Niner [patches] on Amazon and iron it on to save some money, because some of that stuff is like $150,” he said eyeing a potential purchase.
Huland, a paraprofessional in San Francisco, said he arrived downtown just before 6 a.m. to scope out some deals. He was surprised to find that the streets were empty.
“I was expecting it to be a whole lot different, but I think most folks are probably going to Target or BestBuy for the electronics,” Huland said.
Macy’s Herald Square in Manhattan, where discounts included 60% off fashion jewelry and 50% off select shoes, was bustling with shoppers early Friday.
The traffic was “significantly larger” on Black Friday compared to the previous two years because shoppers feel more comfortable in crowds, Macy’s Chief Executive Jeff Gennette said.
He said that bestsellers from Macy’s online sale, which started last weekend, included 50% off beauty sets. Last year Macy’s, like many other stores, had supply chain issues and some of the gifts didn’t arrive until after Christmas.
Inflation might explain an increase in gift card purchase plans this holiday season. The average planned holiday spend on gift cards increased 7% nationwide from last year, according to the Deloitte survey.
For stores, the big question is whether this markdown-heavy holiday season will be profitable.
With retailers having to spend more on labor and to stock their shelves, “what they fear is that their own cost increases aren’t going to match the sales increases that they’re going to put out,” said Neil Saunders, managing director at GlobalData Retail.
The small amount of growth in spending numbers also doesn’t take into account inflation, which means the volume of product sold may still be down this year.
Target was among several retailers favored by middle-income and lower-income consumers to be surprised since the beginning of October by what Target Chief Executive Brian Cornell described to investors as “rapidly softening demand.” Meanwhile, upscale brands and chains have reported more healthy sales.
The Associated Press contributed to this report.
This story originally appeared in Los Angeles Times.