As Black Friday approaches, retailers are offering big discounts, but shoppers may be hesitant due to dwindling savings and growing credit card debt.
Consumer Spending Pressures
The upcoming Black Friday is anticipated to be accompanied by substantial discounts and incentives to attract shoppers to stores. However, retailers are expressing concerns about the effectiveness of these strategies, given the financial pressure on consumers. With diminishing savings and increasing credit card debts, shoppers are feeling the strain. While inflation has slightly eased, the prices of essential goods and services like meat and rent have significantly risen over the past three years, limiting consumer purchasing power.
One shopper, Barbara Lindquist, plans to spend approximately $1,000 on holiday gifts for her extended family, a figure consistent with the previous year. However, she is prioritizing seeking deals due to persistently high prices, particularly for staples like meat. Lindquist also intends to purchase more gift cards to adhere to her budget. Other consumers are expected to adopt similar tactics, focusing on value and carefully monitoring their expenses.
Retailers’ Adjustment and Expectations
To accommodate cautious consumer spending, many retailers have reduced their holiday season inventory and initiated sales promotions earlier than in the previous year. The impact of supply chain disruptions during the pandemic has prompted an earlier shopping trend, with shoppers spreading out their purchases. Retailers anticipate that shoppers will be more deal-focused and tend to delay purchases until the last moment. Some, such as Best Buy and Kohl’s, have adjusted their promotions to cater to this behavior.
Retail Industry Projections
The National Retail Federation forecasts a moderate increase in holiday spending compared to the previous year, reflecting heightened economic uncertainty. Despite an expected 3% to 4% growth in holiday sales, this growth rate is a deceleration from the prior year’s 5.4% increase. While online discounts, particularly for toys, electronics, and clothing, are projected to be more attractive than last year, analysts emphasize the significance of the Black Friday weekend, including Cyber Monday, as a pivotal indicator of consumer spending sentiment.
Consumer Behavior Expectations
Retail analysts foresee Black Friday remaining the busiest shopping day, with consumers displaying a deliberate approach to purchases. Shoppers are anticipated to adhere strictly to shopping lists, demonstrating reduced impulse buying tendencies, and are likely to spread their buying activity throughout the holiday season.