What Black Friday and Cyber Monday Sales Reveal About Consumer Spending
Black Friday and Cyber Monday spending reached record numbers last week – both in sales and number of shoppers. In today’s Market 360, let’s dig into the details.
The National Retail Federation (NRF), a trade group that tracks the figure for in-person and online shopping, reported that 196.7 million people bargain-hunted from Thanksgiving Day to Cyber Monday.
Black Friday sales topped record spending, bringing in $9.12 billion this year according to Adobe Analytics, which tracks retail websites. This is a 2.3% increase from last year. Consumers clicked their way through Friday’s deals, with internet spending up 23% from the last pre-pandemic year. Specifically, 48% of customers bought their Black Friday items using smartphones, a 44% increase from last year. Cyber Monday sales – the biggest shopping day of the five-day holiday weekend – hit a record $11.3 billion, jumping 5.3% from 2021.
On average, shoppers spent $325 on holiday-related purchases, compared to $301 last year. The highest-selling categories were clothing, toys, gift cards, electronics and media, including books and video games. And customers bought these items by dipping into their savings, checking out with credit cards, and using layaway options more than ever before.
But the reality is that as consumers take on more debt, this could impact their spending in the first quarter – because if a lot of money is spent in the fourth quarter, it will have to be paid back in the first quarter.
While many customers did purchase items online, National Retail Federation CEO Matt Shay said that shopping activity this holiday weekend revealed that they are ready to buy in-store again, as COVID-19 restrictions have eased over the last year.
In 2021, retailers including Walmart Inc. (WMT), Target Corporation (TGT), and Best Buy Co., Inc. (BBY) remained closed over the Thanksgiving holiday. And on Thanksgiving Day, visits to brick-and-mortar stores plummeted 90.4% from 2019 levels. This year, however, more than 122.7 million people shopped in-store over the weekend, a 17% spike from last year.
Shay also stated, “Consumers are out shopping, but they’re out shopping when they see deals and when they get the promotions that meet what it is they’re looking for, and so you can get them engaged, but you’ve got to deliver value and price.”
So, the fact is that while customers are shopping in-store more than in recent years, what they’re really hungry for are big bargains.
Two weeks ago, I spoke about Walmart’s strong third quarter earnings – helped by consumers’ flee to the discounter from more expensive stores, like Target. And Walmart’s value deals also helped the company bring in Black Friday traffic. The retailer dominated online searches for deals, surging 386% year-over-year and topping searches for Amazon.com, Inc. (AMZN), which ranked as the most-searched-for retailer on Black Friday last year.
The National Retail Federation considers the holiday shopping season to be from November to December 31, so we still have about half of the holiday shopping season to go. It expects sales for these two months to rise between 6% and 8% from last year, and Adobe Analytics expects online sales for November and December to increase 2.5% from last year.
But the reality is that while Black Friday and Cyber Monday sales continue to annually break records, the figures over the long holiday weekend aren’t adjusted to reflect inflation. This means that the amount of goods bought online and in stores might have actually fallen, with the price of these goods simply having increased.
So, the fact remains that we’re still in an inflationary environment… and it’s still a huge problem in America.
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