As Black Friday and Cyber Monday arrives, retailers are gearing up with significant discounts and promotions to attract shoppers.
However, there’s a growing concern among these retailers that these efforts may not suffice. Consumers are currently grappling with dwindling savings and increasing credit card debt, despite some respite from easing inflation. Costs for essential items like meat and rent remain significantly higher than they were three years ago, adding to the financial strain on households. Barbara Lindquist, an 85-year-old pre-school teacher from Hawthorne Woods, Illinois, exemplifies this cautious consumer sentiment. Despite planning to spend around $1,000 on holiday gifts, the same as last year, Lindquist intends to focus more on finding deals and opting for gift cards to manage her budget effectively.
Retailers, anticipating a change in consumer spending habits, have adjusted their strategies accordingly. Many have reduced their inventory orders for this holiday season and initiated holiday sales earlier than last year, starting in October. This move is to help shoppers spread out their expenditures, a trend that has become more pronounced since the pandemic, especially following supply chain disruptions in 2021. Companies like Best Buy are offering more products at opening price points, while Kohl’s has simplified its deals, highlighting items under specific price points, such as $25. Target observed that shoppers are delaying purchases, waiting for colder weather before buying items like sweatshirts or denim, a shift from the typical early fall shopping period.
The National Retail Federation predicts a modest increase in holiday spending, forecasting a 3% to 4% rise for November through December, compared to a 5.4% growth last year. This forecast aligns with the average annual holiday increase of 3.6% observed from 2010 to 2019, pre-pandemic. The pandemic years saw a surge in spending due to federal relief checks and restricted mobility. Adobe Analytics anticipates better online discounts this year, especially in categories like toys, electronics, and clothing. The Black Friday weekend, including Cyber Monday, remains a crucial period for gauging consumer spending willingness. Sensormatic Solutions expects Black Friday to be the busiest shopping day of the year, with the top 10 shopping days accounting for around 40% of all holiday retail traffic. Marshal Cohen, chief retail adviser at Circana, suggests that consumers will likely stick to their shopping lists and avoid impulse buying, indicating a more deliberate and prolonged shopping pattern this season.
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