Running on little sleep, Jade Mendez, 20, and Miguel Reyes, 18, waited outside Walmart in Burbank on Black Friday morning, continuing a family tradition.
The siblings were first in line at 5 a.m., as they had been in years past, huddled together, shivering in their pajamas. They chose the Burbank Walmart because of its proximity to other shops, including Sephora, Target and Best Buy, which they were planning to hit after Walmart.
This year, they brought along their younger sister Misell Reyes, 16, hoping to get her a reasonably priced pair of Apple AirPods.
Although Black Friday no longer features the deeply discounted big-ticket items that once drew the family, these annual shopping excursions have become a cherished tradition for the siblings, and they still show up year after year.
“In the past, people were actually saving money from large discounts on TVs and electronics,” Mendez said. “That’s what I wanted to see, but you’re not going to see that anywhere anymore.”
Miguel Reyes agreed. He said he didn’t anticipate Black Friday shopping for the best deals, but to make memories.
The frenzied mall mobs characteristic of Black Friday — and Thanksgiving, until COVID-19 shutdowns squashed that retailer move to out-compete one another — had faded even before the pandemic, with the growth of e-commerce and ever-earlier holiday promotions, which this year began well before Halloween.
But shoppers hungry for deals after months of inflation’s relentless squeeze were hitting retailers in force Friday, particularly at lower priced spots such as outlet malls and discount stores.
At Walmart in Burbank, around 70 people were in line five minutes before the 6 a.m. opening. Once doors opened, the store’s security slowly ushered shoppers in, a few people at a time, irritating some in line who were eager to snap up Black Friday specials before they were sold out.
Despite evidence showing that shoppers recently have pulled back, data from consumer surveys indicate that overall spending is expected to hit unprecedented levels this holiday season.
U.S. consumers, buoyed by a robust labor market, have demonstrated unexpected resilience even as they contend with stubborn inflation. But to pull off this spending feat, a significant number of shoppers are expected to rely on credit cards and buy-now-pay-later plans to fund their holiday spending this year.
“They might buy fewer gifts because things are more expensive, but we expect spending to be up,” said George Noceti, a wealth advisor at Morgan Stanley. “So we think that this will be another banner year in terms of Black Friday, Cyber Monday, and all the discounting that goes on in January.”
As stores sat closed on Thanksgiving Day, shoppers turned to their computers. Consumers spent $5.6 billion online Thursday, up 5.5% from last year and nearly twice as much as the $2.87 billion that was spent on the same day in 2017, according to the latest Adobe Analytics figures. Nearly 60% of purchases came through a mobile device, an all-time high.
The National Retail Federation predicted that in-person and online holiday spending will be up 3% to 4% from last year, reaching record levels between $957.3 billion and $966.6 billion. The increase in spending is predicted to slow from last year’s 5.4% boost, according to the trade group’s data.
Online shopping is expected to be robust.
“Now it’s very online focused, and we’re really looking to see the online velocity surge on the major days like Black Friday and Cyber Monday,” said Vivek Pandya, lead analyst at Adobe Digital Insights. In line with recent years, e-commerce sites are expected to be inundated on Black Friday and Cyber Monday as consumers shop from the comfort of home.
The four-hour window from 6 to 11 p.m. Pacific time Monday is expected to be the busiest shopping period of all, with spending projected at nearly $4 billion, according to Adobe Analytics.
Black Friday may not be the bellwether of the holiday shopping season that it once was, but overall retail sales during the season remain an important gauge of consumer health and a key source of retailer profits. Consumer spending on goods and services accounts for nearly 70% of the nation’s economic activity.
Another early riser, Albert Reynolds, 61, was running non-holiday errands and stopped by the Best Buy on Pico Boulevard in the Sawtelle neighborhood around 7 a.m. to check another task off of his list: buying a pair of Sony wired earbuds. The store wasn’t very crowded, and there was no line outside.
Reynolds is always hunting for the best deals, he said, checking prices and reviews online before purchasing a product. On previous Black Fridays, he bought a Samsung tablet and a microwave, he said. But this year, he left the store empty-handed just 10 minutes after arriving.
Best Buy didn’t stock the exact model of earbuds he wanted. He’ll likely buy them from Amazon, he said.
Even though his shopping trip wasn’t fruitful, Reynolds still respects the institution of Black Friday.
“I like the idea that if you really wanted something you could get it at a great price, but there’s nothing I’ve really been after so much,” he said. These days, he added, Black Friday also seems “less focused on just this one day.”
By 10 a.m., the Best Buy was finally getting busier. The parking lot, which was half-empty a few hours earlier, was close to full. Some shoppers exited the store with their hands full, followed by employees who helped them load their new purchases into their cars.
Leadership at the MainPlace Mall in Santa Anita also noted a change in consumer behavior as holiday sales rolled out in the weeks before Black Friday. The mall has not returned to the hustle and bustle it had on Black Friday before the pandemic, said Cory Sams, the mall’s general manager.
“They’re stretching out the deals to hit earlier than just the day of Black Friday, so sales the week prior were even higher than the week of Thanksgiving last year,” he said. “It’s a different model of holiday sales now.”
The afternoon is expected to be busier than the morning, which was relatively quiet this year. Around 9 a.m., shoppers casually browsed for clothes at the MainPlace Macy’s, which opened its doors at 6 a.m.
“People will want to bring their kids and families, so we expect more people to trickle in later in the day,” said Patrice Conover, the mall’s marketing director.
Although retail sales and consumer confidence fell in October, people feel differently about the holidays.
“We’re seeing disproportionately more optimism as it relates to holiday shopping versus regular day-to-day and regular discretionary shopping,” said Mrin Nayak, a managing director and partner leading holiday research at Boston Consulting Group.
Consumers want major discounts, and they are likely to find them this year. Holiday discounting lagged in 2020 and 2021 in response to economic uncertainty and fueled by consumers’ increased savings during the stay-at-home era of the pandemic.
Given the precarious situation of many consumers, retailers know that shoppers are demanding major discounts — and will hold out for the best deals. Analysts project that many shoppers will also rely on credit cards and other pay-later programs to finance their holiday purchases, a strategy that carries the risk of added interest and other costs.
Many retailers offer buy-now-pay-later programs. And most buy-now-pay-later apps — backed by companies including Afterpay, Klarna and Affirm — let users split their final bill into four interest-free payments, an attractive alternative to using credit cards, which carry an average interest rate of more than 19%, according to November data from Bankrate.
“The consumer is bargain hunting this year,” Nayak said. “They are looking for deals to counter inflation, and they are looking to make sure that they’re shopping at places that give them really differential value versus the rest of the year.”
The latest Adobe Analytics figures show that in the days leading up to Black Friday, retailers were already marking down products in popular categories: Electronics, appliances, toys and apparel were discounted on average more than 20%.
“I think because we’re seeing this level of discounting that we’re profiling across these categories, it’s helping keep consumers incentivized to spend this season,” Pandya said. “But we’re expecting the discounts to get bigger and better on these major days between Black Friday and Cyber Monday.”
Low unemployment is expected to help power the shopping season. The U.S. job market has remained steady despite pressure from rising interest rates, with employers adding an average of 204,000 jobs a month between August and October.
“The unemployment rate is extremely low, so people are getting a paycheck,” Noceti said.
Gen Z and millennials are predicted to spend big this year, fueled by low unemployment and healthy wage gains in their demographics.
“Labor markets have disproportionately favored younger generations that might have more disposable income this holiday season,” Nayak said. “And so we’re expecting to see that divergence in the consumer based on generation on willingness to spend.”
One-third of Gen Z and millennials plan to spend more on holiday gifts than last year, according to findings from Boston Consulting Group. At the same time, only 20% of baby boomers plan to spend more, feeling squeezed by inflation and fixed income budgets.
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