Friday, February 3, 2023
HomeMarketBlack Friday Is Off to a Strong Start. Deals Are Drawing Crowds.

Black Friday Is Off to a Strong Start. Deals Are Drawing Crowds.

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Black Friday is here and, while it’s no longer the powerhouse it once was, this holiday weekend is still the most important date on the retail calendar. So far, data show consumers are snapping up deals.

As of early Friday, it seems many were eager to turn from eating turkey to hunting for bargains. Americans spent a record $5.29 billion on Thanksgiving Day, according to
And they spent mostly on their phones: Mobile shopping accounted for 55% of sales—another record.

Americans bought toys—top sellers spanned Hot Wheels to videogame consoles—and snatched up gadgets.
AirPods were one of the most popular purchases, as were smart TVs and digital cameras.

Still, the strain of inflation is being felt. More online shoppers opted to “buy now and pay later,” with revenue for those services up 1.3% this year.  

Data from
were similar. That firm said 78% of all online traffic from the U.S. was on mobile, and online sales were up 9% from last year to $7.5 billion. Globally, online sales rose 1% from 2021 to $31 billion.

Deals were there for the taking, if not eye-popping ones. Salesforce noted that online discount rates were up 6% from last year to 27% globally, and up 7% domestically to 31%.

Salesforce also noted the average value of buy now, pay later transactions decreased in the U.S. by 6% on Thanksgiving, showing shoppers were choosing to finance lower-priced goods, another sign that inflation is still painfully high.

Early data from
showed that the peak for holiday shopping on Black Friday was at midnight Eastern Standard Time. The firm said nearly three-quarters of purchases are made on mobile devices and the average shopping cart total was $109.33. Consumers were most interested in apparel, accessories, health, and beauty.

Analysts were cautiously optimistic on Friday as well. Cowen’s Oliver Chen called the traffic he observed encouraging, and said retailers may benefit from an extra weekend between Thanksgiving and Christmas this year. That said, he thinks shoppers are firmly focused on deals and discounts.

Piper Sandler’s Edward Yruma noted that while in-store traffic seemed to be stronger this year than last, it hasn’t returned to prepandemic levels. The heyday of “the historic raucous atmosphere of Black Friday may be in the past,” he said. That could be because retailers shifted their promotions earlier in the year; Yruma noted that many stores have been running deals all month.

Indeed, Black Friday itself is no longer a single day, either. It’s now an event that stretches from Thanksgiving to Cyber Monday. Worries about an economic downturn are on investors’ minds, raising the stakes for this year’s holiday shopping season. Many are watching to see if Santa is splurging or skimping.

Inflation is crimping budgets—as well as shoppers’ willingness to return to stores as the Covid-19 pandemic wanes, Adobe said. The firm noted that Americans have spent $77.74 billion so far in November, up only 1% year over year.

Some consumers may simply be holding out for better deals. Adobe expects Cyber Monday to rake in $11.2 billion, 5% more than what the day brought in last year.

Overall, Adobe anticipates Americans will spend $34.8 billion over the long weekend, which stretches from Thursday to Monday. That would put the total up 2.8% year over year, and mean the five-day period would account for more than 16% of the November-December shopping season.

Hopes weren’t particularly high going into this holiday season. While Americans are expected to spend more this year than last year, it isn’t because they are feeling flush. Rather, it’s because they have to spend more to get the same goods. Adjusted for inflation, holiday spending is expected to fall.

However, that prediction may prove too cautious. As of October, the most recent month for which data are available, inflation has been easing and retail sales have been stronger than expected. Moreover, the retail sector’s earnings season has been surprisingly strong so far.

To what extent inflation will hurt holiday sales remains an unanswered question.

Another question is whether the discounts being offered will hurt retailers. Inventory ran high in the summer, prompting many stores to use deep discounts to clear their shelves. As a result, retailers’ stocks were slammed when earnings showed margin-crunching promotions hurt profits.

Investors fear a repeat of that situation.

Retailers such as
(ticker: AMZN),
(WMT), and
) started offering holiday deals in October. With inflation gobbling up people’s budgets, retailers thought they needed to lock in sales before consumers were tapped out.

That could account for some of October’s strong retail spending. Shoppers may have jumped at deals, hoping to score much-needed savings. After all, consumer confidence remains very depressed.

Whether spending peaked in October, peaks this weekend, or remains strong now through December will say a lot about the health of the consumer. Their spending accounts for more than two-thirds of the U.S. economy

The answer to that question is inextricably tied to the performance of retail stocks and the broader economy. If spending data for the long weekend comes in strong, that could go a long way to helping battered retail stocks regain some footing. The
SPDR S&P Retail
exchange-traded fund (XRT) has fallen more than 27% this year despite a rally around positive earnings that sent shares up 7.6% in the past month.

There’s one big Grinch in the room, though: A very strong holiday shopping season might be a reason for the Federal Reserve to keep raising interest rates. The central bank is trying to quell demand just enough to slow down the pace of inflation without hurting the economy.

Write to Teresa Rivas at


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