Prices remain high in other areas, and that crimps consumer spending
NEW YORK (AP) — Stores stepped up discounts and other enticements on Black Friday to entice shoppers holding out for the best deals. But retailers worry those may not be enough.
Consumers are coming under pressure as their savings dwindle and their credit card debt grows. And although they have gotten some relief from easing inflation, many goods and services like meat and rent are still far higher than they were just three years ago.
Yvonne Carey, 72, was among the first shoppers at Macy’s Herald Square store in Manhattan where she snapped up discounted Michael Kors slippers and a pair of Ugg boots for herself. But Cary said she plans to stick to same budget as last year, about a $1,000, as she shops for gifts for her six grandchildren and her husband.
“The prices are crazy on everything food, clothes,” Carey said.
Many retailers ordered fewer goods for this holiday season and pushed holiday sales earlier in October than last year to help shoppers spread out their spending. The early shopping trend accelerated during the pandemic when clogs in the supply network in 2021 made people buy early for fear of not getting what they wanted.
But this year, retailers said more shoppers are focusing on deals and waiting until the last minute.
At Macy’s Herald Square store, shoppers began streaming in soon after the doors opened at 6 a.m., finding discounts of between 40% and 50 % on almost all boots and shoes. Diamond jewelry was discounted by 60%. Many handbags had 50% price cuts.
Macy’s CEO Jeff Gennette told The Associated Press the crowds at Herald Square and other locations were bigger than last year, though he declined to give figures.
Facing competition from travel and restaurants, Macy’s stepped up experiential shopping this season. Herald Square, the Disney Princess shop has augmented reality allowing customers to virtually step into one of the princess dresses.
“The customer is under pressure. You see it with what is going on in luxury. That is a recent development,” Gennette said, adding that shoppers across all income levels are ”more discerning about how they are spending their budget.”
Best Buy said it’s pushing more items at opening price points, while Kohl’s has simplified its deals, promoting items under a certain price point like $25 at its stores.
Target said shoppers are waiting longer to buy items. For example, instead of buying sweatshirts or denim back in August or September, they held out until the weather turned cold.
“It’s clear that consumers have been remarkably resilient,” Target’s CEO Brian Cornell told analysts last week. “Yet in our research, things like uncertainty, caution and managing a budget are top of mind.”
Gone are the Black Fridays of years ago when customers would stand in line for hours in the middle of the night, or brawls would break out between shoppers over high demand items.
Friday’s scene was mostly tame, aside from a big mall in New Jersey, just outside New York City, being evacuated for a bomb threat, authorities said. People in the area of the American Dream Mall received emergency alerts on their cell phones telling them to use the nearest exits. The mall was deemed safe and returned to normal operations after the New Jersey State Police Bomb Unit and K-9 unit performed sweeps for explosive devices and found none.
Salesforce said online sales rose 1% to about $7.5 billion year-over-year on Thanksgiving, as retailers offered better deals. Sales of shoes and handbags increased the most at 11% compared to last year, followed by a 6% rise in sales of healthy and beauty products. Global online sales also rose 1% to $31.7 billion, according to Salesforce, which tracks data from more than 1.5 billion consumers.
Salesforce said online discounts rates in the U.S. have risen to 28% this week, compared to 21% last year, with retailers offering the best deals on apparel and health and beauty products.
The National Retail Federation, the nation’s largest retail trade group, expects shoppers will spend more this year than last year, but their pace will slow given all the economic uncertainty.
The group has forecast that U.S. holiday sales will rise 3% to 4% for November through December, compared with a 5.4% growth of a year ago. The pace is consistent with the average annual holiday increase of 3.6% from 2010 to pre-pandemic 2019. Americans ramped up spending during the pandemic, with more money in their pockets from federal relief checks and nowhere to go during lockdowns. For the holiday 2021 season, sales for the two-month period surged 12.7%.
Online discounts should be better than a year ago, particularly for toys, electronics and clothing, according to Adobe Analytics, which tracks online spending. It predicts toys will be discounted on average by 35%, compared with 22% a year ago, while electronics should see 30% cuts, compared with last year’s 27%. In clothing, shoppers will see an average discount of 25%, compared with 19% last year, Adobe said.
Analysts consider the five-day Black Friday weekend — which includes the Monday after the holiday known as Cyber Monday — a key barometer of shoppers’ willingness to spend. And Black Friday is expected to be once again the busiest shopping day of the year, according to Sensormatic Solutions, a firm that tracks store traffic. On average, the top 10 busiest shopping days in the U.S are expected to once again account for roughly 40% of all holiday retail traffic, Sensormatic said.
Marshal Cohen, chief retail adviser at Circana, a market research firm, said he thinks that shoppers will just stick to a list and not buy on impulse. He also believes they will take their time buying throughout the season.
“There’s no sense of urgency,” Cohen said. “The consumers are saying, ‘I will shop when it’s convenient for me.’”
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