$9.12 Billion Spent on Black Friday, But Not Everbody is Seeing Green

by Wall Street Rebel - Michael London | 11/28/2022 6:11 AM
$9.12 Billion Spent on Black Friday, But Not Everbody is Seeing Green

Some retailers aim to clear out their inventory while shoppers are still spending. Companies are giving discounts to encourage people to buy before another economic catastrophe.

 

Retailers are not only competing with one another to acquire consumers now that the crucial Christmas shopping season has arrived. They not only have to contend with the already high prices but also with the ongoing and increasing inflation.

For the time being, Americans are spending, bolstered by savings from the epidemic and a red-hot work market. But at the same time, costs are soaring at the quickest pace in decades, and the Federal Reserve is seeking to reign them in by increasing interest rates. This is even though prices are climbing at the fastest pace in decades. Consumers are developing a negative outlook on the economy due to efforts to reduce demand by making it more difficult to borrow money. And there is a substantial risk of economic contraction.

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Retailers, some of which are sitting on an excess of goods, want to sell as much as they possibly can while customers are still taking their wallets out of their pockets. Therefore, companies are bombarding clients with discounts to convince them to make a purchase before a downturn in the economy causes a shift in behavior for the second time.

Despite worries about a recession and increasing costs, Black Friday sales on the internet broke all previous records.

According to Adobe Analytics, which monitors more than 85 percent of the top 100 online retailers in the United States, customers made a record purchase of $9.12 billion when buying online on Black Friday. This is a 2.3% increase over the same time last year, and it will be enough to beat the previous record mark for online Black Friday sales, which was $9.03 billion, in 2020.

According to the company's 2022 Holiday Shopping Trends & Insights Report, over half (48%) of all online purchases were made using smartphones, which is an increase from the previous year's figure of 44%.

According to the data, the number of customers who made purchases using the "buy now pay later" service increased by 78% over the previous week during the period of November 19-25.

On Black Friday, consumers showed their willingness to spend more money to start off a Christmas shopping season with billions at stake. Retailers have had difficulty adapting to customers' changing preferences due to rising inflation (which has just lately shown signs of reduction), rising interest rates, and a generally reduced fear of a global pandemic. Some businesses have found success by beginning to sell seasonal items as early as the late summer or early autumn.

Analyzing holiday buying trends may provide light on the economy's trajectory in the next weeks and months.

The majority of economists subscribe to the view that consumer spending, which is responsible for around 70 percent of overall economic growth, will continue to be robust in the fourth quarter, mostly because households will continue to save money. According to estimates provided by the Federal Reserve, as of the middle of this year, the American people had amassed a total of around $1.7 trillion in additional savings as a result of the epidemic, which was made possible in part by the assistance provided by the government.

Because inflation causes both price increases and a reduction in discretionary expenditure, it is likely to have an impact still this Christmas season.

The National Retail Federation predicts that Christmas sales, including internet purchases, will increase by 6-8% this year, to a total of $942.6-$960.4 billion. This is a decrease from the 13.5% growth seen in 2016. But the organization also noted that these projections do not account for inflation, so that actual expenditure may be lower.

Concerns about increasing costs and a recession didn't stop online buyers from having a record-breaking Black Friday.

Meanwhile, third-quarter credit card balances grew by 15% year-over-year, citing the Federal Reserve Bank of New York. Because of the growing cost of borrowing money, consumers' reliance on credit has increased to its highest level in over twenty years.

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Shoppers snatched up Christmas sales merchandise sooner than normal in October, driving retail sales growth to an unexpected 1.3%. Third-quarter profits for several large retailers, like Walmart and Home Depot, were high because of the demand for necessities like food and supplies for home improvement and DIY projects.

However, a number of shops reported that demand for their items slowed down over the month, and when customers did make purchases, they seemed to be driven by discounts. To prevent being taken by surprise in the next year, the financial projections of some businesses have been slashed, while others have simply chosen not to offer forecasts at all.

The last few months of this year were not planned to go like this at all. Retailers struggled against the epidemic's effects for the better part of two Christmas shopping seasons. Retailers had been anticipating a return to anything like normalcy now that the virus limitations and supply chain bottlenecks that had characterized previous times had, for the most part, been alleviated.

Instead, shops are finding themselves in the position of attempting to avoid an impending economic slump.

To entice bargain-hungry shoppers and move unwanted inventory, many companies are promoting "value," offering steep discounts and low prices more than last year, even as labor costs remain high. Many started their holiday blitzes early in the hopes of jump-starting sales. Target held Deal Days in October, and Old Navy rolled out a "Sorry, Not Sorry" holiday campaign. "Value clearly matters to everyone," Corie Barry, the chief executive of Best Buy, said on an earnings call last week.

Many businesses are pushing "value," or cheap pricing and deep discounts, in order to attract price-conscious consumers and get rid of unsold stock, despite the fact that labor expenses are higher than they were a year ago. Many businesses began their Christmas marketing campaigns early in the year to increase revenue.

Retailers aim to make the shopping experience as simple as possible for customers. Kohl's CFO Jill Timm said the company was delivering more tailored offers to consumers and was being more transparent about discount levels for particular things so that no one would be confused "because they had to perform math."

On Black Friday and over the weekend, consumers seemed to pay attention to prices.

According to statistics that were provided on Friday by Adobe Analytics, online retailers reduced the cost of a variety of products, including toys, gadgets, and laptops. According to statistics provided by Adobe, this year's discounts on athletic goods and TVs were much deeper than the discounts offered the year before, while this year's apparel prices were somewhat lower. According to Salesforce's research, the average amount of a discount offered during Black Friday sales in the United States was thirty percent. According to Salesforce, the average percentage of a discount offered on Black Friday in 2019 was 33 percent.

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According to statistics from Mastercard SpendingPulse that was published on Saturday, retail sales on Black Friday jumped by 12 percent from the previous year, while sales via e-commerce increased by 14 percent in comparison with 2021. These numbers reflect money spent in shops, restaurants, and other eating establishments.

Despite this, not everyone was happy with the outcome. People expressed their disappointment on social media that the Black Friday sales weren't as substantial as they had hoped they would be.

 

                       Record Number Of Shoppers Put Inflation Aside For Black Friday

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