After two years of pandemic improv and store restrictions, this year’s Black Friday felt like a return to normality.
Shoppers who ventured out on Friday, and even those who didn’t, saw a deluge of deals they hadn’t seen in two years. Many retailers pushed lower prices in stores and online in response to Americans recently demonstrating that they were more than willing to wait for a discount before making a purchase.
“I think we’re going back to what we had before the pandemic with what we’re offering on Black Friday,” said Stephen Lebovitz, chief executive of CBL Properties, which owns about 95 properties, including strip malls and malls across the United States. states “There are changes, but it will be much more like Black Friday 2019 than anything in the intervening years.”
Still, near-record inflation and dwindling savings kept some shoppers at home and left retailers unsure of what the season would ultimately bring.
Many affluent consumers are financially stable and seem willing to spend, but others face much more economic uncertainty. That is not expected to change anytime soon. Analysts, economists and retail executives are monitoring a possible economic slowdown in the first months of 2023 that could worsen consumer caution.
That makes the holiday season, always the most important time for retailers, even more crucial this year.
Starting the day at Macy’s Herald Square, the department store’s main New York location, there was a steady stream of customers and store employees cheered as people walked in. Some said they were excited to buy but worried about prices.
Tammy Freeman, 59, of New York, stood at the front of the line near the store’s main entrance, ready for her annual Black Friday outing. She said she was anxious to buy several items, including a laptop case for her daughter, but she noted that inflation was changing her overall spending approach.
“I have to budget more,” he said. “I have to catch more sales.”
Eighty percent of holiday shoppers are likely to make a purchase from Black Friday to Cyber Monday, according to a Bankrate survey. People who shopped online also pulled out their wallets on Thanksgiving Day, with sales up 2.9% compared to the previous year, according to Adobe Analytics, which tracks online sales. Adobe estimated that online spending for the holiday season would increase 2.5% over last year. He said he had calculated that online prices fell 0.7% in October compared to last year, largely due to early Christmas sales, though they were up 0.3% from September.
On Friday, bargain-hunting shoppers definitely seemed to have the power. Stores posted signs advertising items with a 50% to 60% discount. At a Target in Springfield, Illinois, shoppers walked around with 65-inch televisions in shopping carts, some wearing matching T-shirts that read, “Gather, Gobble, and Shop.”
In San Francisco’s Union Square, it was relatively quiet. By 7 a.m., when the line outside Macy’s had thinned, it felt “pretty much like a normal day,” said Clifford Cheng, a retail associate at the store.
At a nearby Neiman Marcus, only about a dozen shoppers were waiting outside before the store opened at 9 a.m. Natali Carrasco, 20, and Batechaa Steele, 20, shopped for the first time on Black Friday at the luxury department store.
“We always come and buy here, but we always buy full price, so we wanted to see sales,” Carrasco said.
Even before the start of the season, some shoppers were already cutting back on discretionary purchases, leaving retailers with an unusually high level of inventory. They want to download as much of that as possible before the start of the new year.
“The more sale merchandise they move now, the better,” said Kristen Gall, president of the online platform Rakuten, which offers cash-back offers. “Because if you get caught with a lot of inventory in January and February and consumers pull back because things feel significantly more recessionary, that’s where the concern for retailers arises.”
Despite the economic concerns expressed by shoppers, retailers said they were optimistic.
“Even in really difficult years, Black Friday is a very strong day for us,” Macy’s CEO Jeff Gennette said in an interview.
And there were promising signs. Forty percent of consumers said they planned to shop at malls this holiday season, more than 35% of consumers who did during the 2019 holiday season, before the pandemic closures, according to a survey by the consultancy KPMG. Last year, the number of shoppers who said they planned to venture inside a mall was 31%.
Americans were also still buying gifts online. Adobe said online sales for Black Friday were expected to total $9 billion, up 1% year-over-year.
Retailers took different approaches to entice shoppers to spend. Macy’s did not bring back opening sales, which disappeared during the pandemic amid social distancing guidelines, and instead offered all-day sales. It also continued the pandemic-era tradition of Santa taking photos with children while he sits behind a desk, a sign that COVID-19 concerns persist.
JC Penney leaned into Doorbusters for the first time since 2019 because it said it wanted to motivate discount-focused shoppers to hit the stores. For its 5 a.m. open doors, the department store chain deliberately kept “pre-inflation prices” on key items like Instant Pots, bath towels and boots. Signs in stores advertised 65% discounts.
“We believe we will have a high volume of customers in the store, and in order to attract them, we know that value is very important to the consumer right now,” said Marc Rosen, chief executive officer of JC Penney.
On its website, the owner of the CBL mall highlighted the discounts offered by stores such as H&M and children’s clothing retailer Carter’s. Other retailers employed a similar strategy in the days leading up to Black Friday. J. Crew announced a 50% discount on purchases on Monday. On the Gap website, a large black banner scrolled across the top of the page reading “HPY BLK FRI” and highlighting 50% off deals with an additional 10% off.
However, there are risks for retailers in relying more on sales. The practice erodes the profit margins that propelled them during the pandemic, when many Americans spent heavily on all kinds of products and retailers didn’t feel the need to lure them with too many offers. There is also concern that buyers will become so used to the deals that they will only buy when they are promised a lower price.
“Consumers understand that they can wait for discounts to roll in, coupled with the push from retailers to move products, likely means that this Black Friday will be more important than Black Friday has been in a long time,” said Simeon Siegel, managing director. manager of BMO Capital. markets. “If that’s good for the brands, if that’s good for the consumer, that’s a separate conversation.”
Retailers are also competing more with entertainment options, such as concerts and restaurant dining, than in recent years. Consumers are expected to allocate more of their vacation spending to experiences this year than last. The average amount that middle-income Americans, who make between $50,000 and $99,000 a year, spend on experiences is expected to rise 15% this year, according to a survey released in October by Deloitte.
Of course, not all retailers place such importance on Black Friday.
Outdoor equipment retailer REI has been closed on the day since 2015. Earlier this year, the company said it had decided to give its workers a paid day off permanently on Black Friday, encouraging them to spend time outdoors.
But that was the exception. Even as Black Friday sales totals continued to be tallied, many retailers were already looking to further entice shoppers by launching more discounted listings on Monday.
“We think the consumer is quite aware of the fact that there is a lot of inventory on hand,” Richard Hayne, chief executive of Urban Outfitters, said on a call with analysts this month. “And what they’re doing is waiting for the big promotional events that usually happen on Black Friday and Cyber Monday so they can make their purchases.”
Retailers may need to offer more deals, he said, but “I don’t think it’s going to be a total bloodbath.”