The retail industry’s efforts to attract holiday gift shopping are building to a crescendo this weekend with the annual “Black Friday” shopping day followed by the newer “Cyber Monday.”
This year’s big post-Thanksgiving day of sales — a custom increasingly being adopted in Europe and other markets — comes amid lingering concern about the economy, despite still-low unemployment.
As a result, the cuts are expected to be particularly deep, reflecting the pressure warehouses are under to lure US consumers who are suffering from still high inflation for some goods and lingering effects from the turmoil of the Covid pandemic.
Forecasters expect a large consumer movement. The National Retail Federation (NRF) predicts that more than 182 million consumers will shop in stores and online over the weekend.
That attendance — equal to more than half the U.S. population — would exceed last year’s level by 16 million and would be a record since the trade group began tracking the period in 2017.
Oil falls further after OPEC delay as Asian shares struggle
While Black Friday itself remains vital, stores have actually been offering deals for weeks, marketing Black Friday sales earlier and earlier in October.
The early opportunities reflect hyper-competition among retailers trying to win over consumers inundated with offers in digital spaces.
“Consumers won’t sit out, but they will spend less,” said Randy Allen, a senior lecturer at Cornell University’s SC Johnson College of Business.
“Retailers are worried,” Allen said. “They’ve been promoting ‘Black Friday’ deals for the past two weeks. They’re trying to capture consumers.”
Some shoppers in the know will hold off on big purchases until closer to Christmas.
For consumers eyeing the best deals, it’s “probably worth hitting the snooze button,” advised a Wall Street Journal article that cited experts recommending waiting until December for bigger discrepancies.
Barrage of deals: Black Friday kicks off the US holiday shopping season
Picky consumers
Particularly hot items this holiday season include staples like Lego and Hot Wheels, along with Barbie, who is still basking in the glow of this summer’s blockbuster movie.
Game consoles remain in demand, along with Meta Quest 3, a virtual reality headset, new iPhones and tablets.
With inflation for groceries and other essentials still a factor, many shoppers will only buy items if they’re on sale.
“The shopper will be looking for items they really want and need, rather than just buying lots of things on impulse,” said Neil Saunders, CEO of GlobalData. “That’s not necessarily good for retailers.”
Sanders said retailers are “carefully targeting discounts on certain items” rather than “having a free-for-all offer.”
Economists have worried for months that the US economy could slide into recession. In contrast, commentators have been repeatedly struck by the “resilience” of US consumers, especially with regard to the labor market.
Asian markets extend US rally as interest rate confidence rises
Higher interest costs
The NRF has forecast overall holiday sales growth of between 3 and 4 percent, which would signal a return to the pre-pandemic trend of more moderate increases.
While inflation has slowed compared to last year’s level, interest rates remain at their highest level in 22 years following a series of rate hikes by the US Federal Reserve. This can lead to punitive interest costs if consumers default on their credit cards.
Households have less excess cash than a year ago after pandemic relief programs. Also those with student loans are again on the hook for interest payments after the moratorium ends.
On the plus side, consumers have been boosted by a strong labor market that has kept unemployment below 4%.
But Allen pointed to recent layoffs and meager bonuses in some high-paying industries, such as consulting, banking and technology, as “covering up” vulnerabilities and potentially weighing on sales.
Source: AFP