(Bloomberg) -- US retailers experienced what appears to be a muted Black Friday as high inflation and sagging consumer sentiment erode Americans’ demand for material goods.
Bloomberg News will be following the latest developments as information becomes available throughout the day. All time stamps reflect the US East Coast.
Adobe Analytics Boosts End-of-Day Sales Estimate (7 p.m.)
Online sales will rise to between $9 billion and $9.2 billion on Black Friday, Adobe Analytics said in an email. That’s slightly ahead of the company’s earlier projection of $9 billion, which would represent a modest 1% increase from last year. With inflation running at almost 8%, that still means many retailers are losing ground in real terms.
Spending by 6 p.m. Eastern time had totaled $7.28 billion, Adobe said. Hot sellers on Black Friday included Apple Watches and AirPods, smart speakers and televisions, gaming consoles and espresso machines. In toys, Adobe called out Hatchimals, Funko Pop! and Squishmallows as popular items.
For the weekend, Adobe predicts online holiday spending of $4.52 billion on Saturday and $4.99 billion on Sunday. Shoppers can expect discounts of as much as 17% on apparel, 19% on sporting goods and 34% on toys. But would-be computer buyers are better off waiting for Monday, when discounts are expected to peak at 27% from the current level of 17%.
Activity Light at One San Francisco Mall (4:40 p.m.)
At the Stonestown mall in San Francisco, shoppers were few and far between. The Target and Zara stores were mostly empty, and there was no line for the mall’s Santa Claus. Uniqlo and Apple were the busiest locations, but they still weren’t crowded.
Black Friday Waits Exacerbated by Labor Shortage (4:17 p.m.)
Longer wait times at some US stores on Black Friday are probably due to the ongoing shortage of retail workers — one slice of the larger labor-supply issues that have been hitting the country since the pandemic, said Shannon Warner of consulting firm Kearney.
There are many more open positions in retail this holiday season than in past years, she said. As a result, some retailers have opened their stores for fewer hours each day through the year. While some retailers have extended their store hours for Black Friday, they will likely return to those shortened hours.
Retailers just “don’t have enough people to staff the full hours that they have historically had,” Warner said. She said she is encouraging retail clients to consider automation and other efficiency moves, rather than waiting for the possibility of a solution to the retail labor shortage.
Expert Sees Retail Sales Matching Last Year (4:21 p.m.)
Black Friday is kicking off a holiday shopping season that’s likely to see modest to break-even growth in annual sales, says Melissa Minkow, director of retail strategy at digital consultancy CI&T.
“That’s still a win,” she said. In the UK, for instance, high inflation has caused consumers to pull back noticeably on spending. “Americans haven’t behaved that way,” Minkow said. “We’ve still been spending.”
The steep Black Friday discounts, though, are likely to ding companies’ margins. “Profits will not be where retailers want them to be,” Minkow said. That’s in part because they “couldn’t pass all of the inflationary costs off to consumers.”
Thanksgiving Through New Year’s Is Big for Restaurant Gift Cards (3:20 p.m.)
Thanksgiving Day is slow for restaurants, but the holiday marks the start of the period in which the industry sells the majority of its gift cards for the year, according to Credit Suisse. The period lasts through New Year’s.
For the average casual restaurant, the coming weeks can account for more than half of annual gift card sales. Between 35% and 40% of redemptions happen in the first quarter. Many restaurants are pushing for gift card sales by offering customers bonus cards with low value to make the purchase more appealing, for instance an extra $5 gift card with the purchase of one valued at $25, analysts led by Credit Suisse analyst Lauren Silberman said.
See also: Starbucks gift cards eyed in complaint to SEC
Black Friday Deals Seen as Only Slightly Bigger Than October Discounts (3:20 p.m.)
Consumers are finding deeper Black Friday discounts this year versus 2021, but many of this week’s promotions have actually been in place since around October, says Jessica Ramirez, an analyst at Jane Hali & Associates.
In early October, the several dozen retail companies that Ramirez covers launched discounts to clear excess merchandise — and the companies have largely kept them in place through Black Friday. “I would have expected maybe another 10% added as a deal for today,” Ramirez said. But “it’s pretty much the same.”
The retailers “are being fairly strategic,” she said. They want to sell as much inventory as they can while still protecting profit margins, she added, with companies such as Ulta, Macy’s, Coach and Ralph Lauren offering about the same level of promotions from a year earlier. American Eagle Outfitters, the Gap and Lululemon are among those giving a higher level of promotions, she said. Walmart and Target are also offering more discounts.
Ramirez does, however, expect steeper discounts on Cyber Monday.
At the same time, high-end brands in particular have been able to raise prices recently — sometimes faster than the pace of inflation — because of high demand. Investors and analysts want those companies to hold on to those gains, rather than squander them during a promotional holiday season.
“I hope that a lot of brands learned their lesson,” Ramirez said.
High-end handbags had an average discount rate of 30% on Thanksgiving, for example, according to data from Salesforce.
Black Friday-Sized Deals Will Become Scarce (1:41 p.m.)
The days leading up to and including Cyber Monday might be the peak for holiday shopping this year.
“The price-sensitive customer wants to maximize value, they’ve had little power in doing that when it comes to gas prices, food prices or travel,” said Vivek Pandya, lead analyst at Adobe Digital Insights. “Many consumers believed they’d get the best discounts during Cyber Week, and now were seeing them take advantage of that.”
Retailers know that consumers are financially constrained. Black Friday and Cyber Monday allow companies to beat the competition on price. “That is the strategy that can help them win in this environment,” Pandya said. Still, discounts as deep as the ones being advertised on Black Friday will become rare into December, which will make shopping “less appealing for certain consumers,” he said.
Brands at Both Ends of the Price Spectrum Draw Shoppers in Albany (1:28 p.m.)
Around 10:30am at Crossgates Mall in Albany, New York, the ultra low-cost brands and the higher-end buzzy retailers had the most foot traffic, while the middle-market stores were desolate.
Gap Inc.-owned Old Navy, which was offering 60% off most items, had a line so long that some shoppers turned around as soon as they entered the store. Athleisure favorite Lululemon Inc., which had only a few racks of discounted merchandise, and American Eagle Outfitters Inc.-owned Aerie, a popular intimates brand among Gen Z shoppers, also drew big crowds.
Meanwhile, stores like Banana Republic, Macy’s and Urban Outfitters had no lines at all, and only a handful of shoppers.
Apparel is the number one shopping category this holiday season, in part because inflation-constrained shoppers can get clothing items as gifts at relatively low prices, according to Rod Sides, vice chairman of Deloitte. Discounts as steep as 70% off fashion and accessories are the result of retailers’ efforts to both clear excess inventory and capture demand when it’s at its peak.
“Certainly there’s a desire to win the weekend, not only to liquidate excess inventory but also to step in when the customer is willing to spend,” Sides said.
Stamford Shoppers Head to Victoria’s Secret (1:20 p.m.)
Crowds were thin in the late morning at the Stamford Town Center mall. Kay Jeweler, empty. Safavieh, empty. Only a couple of people waited at the checkout line at Forever 21 and just a few were in line for a purchase at Barnes & Noble. At Victoria’s Secret, though, there were more than a dozen people in the queue.
For Gabriel Senatore, a São Paulo native who moved to the US four years ago, shopping on Black Friday is an annual ritual. At the mall with his five-month old and his shopping partner, Angie Simionatto, he told Bloomberg he was on the lookout for shoes and baby gear.
Simionatto noted the mall was less busy than she expected. “Very empty,” she said. Their expedition had just started and they had already made a purchase at Vans, but if they can’t find everything they’re looking for, they have a backup plan: “Amazon. Cyber Monday,” Senatore said.
By 12:30 p.m., at least, the crowds at the mall had begun to pick up a bit.
In Westchester, ‘Not That Different Than Usual’ (12:55 p.m.)
The Target store in Mount Vernon, New York, had discounts on items such as hair accessories, off 30%, and winter boots for women, off 40%. There were markdowns on electronics, too: A 55-inch Samsung TV was discounted to $350 from $630. But the store was only about twice as busy as usual, and most shoppers were only walking out with a modest amount of purchases.
“The sales are OK. It’s not that different than usual,” said Cynthia Carroll, 58, who was with a relative who had bought a gift for her: a Cuisinart AirFryer toaster that was discounted to $159 from $229.
A Bed Bath & Beyond store in the same complex advertised discounts of 40% to 75%, but the occasion was a going-out-of-business sale, not Black Friday. Most of the store’s shelves were already barren, and no holiday music accompanied the deliberations on discounted sheet sets and picture frames.
Salesforce’s Garf: Inflation Boosting Sales Total (12:55 p.m.)
The 9% boost in online sales in the US on Thanksgiving Day, reported by Salesforce, is largely fueled by the highest inflation in decades, said Rob Garf, vice president of retail at the company.
“People are just plainly buying less products because their dollar isn’t going as far as it used to,” Garf said.
As the rising cost of fuel and groceries makes many consumers more cautious to significantly boost spending, they’re seeking — and finding — major discounts. On Thanksgiving Day, the deepest price cuts were on home appliances and apparel, according to Salesforce.
Also making an appearance at the top of the list were high-end handbags, which Salesforce said were seeing an average discount rate of 30%. That’s notable because high-end brands have largely refrained from major markdowns in the past two years given robust demand.
‘Feels Like a Normal Day’ in Chicago (12:14 p.m.)
At a Target store on Chicago’s North Side, the parking lot was barely half full at about 9 a.m. local time. Shoppers were greeted with $3 ornaments and discounted Christmas trees when entering, and the store seemed calm and relatively quiet.
“It feels like a normal day,” said Miguel Martinez, 35, who said he woke up early and decided to come check out the Black Friday deals with his 12-year-old daughter, Jaylen. He described the discounts as “pretty good,” and pointed to a couple of Amazon Echo Dot smart speakers that he picked up for $13 from the electronics department.
In his cart, Martinez also had toys for friends and family, including Nerf guns and a Disney Encanto doll. Martinez, a warehouse supervisor, said inflation has made him cut back on certain things for himself like cable TV and Netflix in recent months to afford presents for his four children. “I really do it for the kids,” he said.
In Target’s toy department, Therese Pociask, 60, was shopping for her own small home day-care center, and also for gifts for her nieces and nephews. In her cart were an Epsom-salt gift pack, Fujifilm Instax camera film, three stuffed dinosaurs and a puzzle.
“I’m looking for sales and deals,” she said. “This one is pretty good,” she said pointing to a buy-one-get-one-50%-off toy discount.
“I’m trying not to cut back,” Pociask said of the holidays this year. She’s planning to spend about $2,000 — about the same as last year — in total for all her family and the day-care, but says inflation is making it tough to get all her shopping done without overspending.
“I’m trying to stay within my budget, but I’m finding I have to spend more for it to look the same,” she said.
Deals Sweeter This Year Than Last, Salesforce Says (12:14 p.m.)
Consumers are finding better deals this shopping season than last year, according to data from Salesforce Inc.
The average consumer discount rate for Thanksgiving Day shoppers online in the US was 31%, Salesforce says. That’s 7% higher than 2021, when retailers didn’t have to put as many items on sale because demand was strong and a lot of merchandise was held up at snarled ports.
But this year’s Thanksgiving Day discounts — which set the stage for better promotions on Black Friday and over the weekend — are still slightly lower than 2019 levels, when the average rate was 33%, according to Salesforce.
After a couple of abnormal years, the start to this holiday season shows that trends are normalizing in terms of discount levels and timing.
Last year, US consumers shopped relatively earlier on concerns that supply-chain problems would lead to a lack of merchandise. “We questioned whether the consumer would be reconditioned to buy early and what the data show us so far is that consumers have snapped back,” said Rob Garf, vice president of retail at Salesforce. “Life somewhat feels normal again and shopping also feels somewhat normal again.”
Thinner Black Friday Crowds Seen Going Forward (12:14 p.m.)
While the pandemic impact may be waning, there still seems to be a notable lack of crowds at many stores.
While traffic levels seem higher than a year earlier, “we think the historic raucous atmosphere of Black Friday may be in the past,” writes Piper Sandler analyst Edward Yruma in a research note, who says this is his team’s 18th year of “multistate” Black Friday store visits.
The relative calm may be attributed to promotions that “definitely shifted” to earlier in the year on the heels of Amazon’s October Prime Early Access Sale. Additionally, both Walmart and Target have run “aggressive promotions” throughout November and other apparel retailers began promotions earlier in the week, he said.
While in-store traffic has improved from the pandemic-related slowdowns in 2020 and 2021, it hasn’t returned to previous levels.
One Mom Seeks Shoes and Cologne at a Quiet Macy’s in Connecticut (11:55 a.m.)
The Macy’s in Stamford, Connecticut, was neat and orderly — maybe a little too neat and orderly on a day associated with shopping chaos. The furniture section was nearly deserted, though there were more shoppers looking at shoes.
Kris Adler, a mother of two teenage sons in her mid-fifties, said she was looking for “festive shoes” for herself, and eyed a black, high-top sparkly sneaker. Her sons had already provided her with a list of mostly sporting equipment and cologne, she said. “The young men are big on cologne,” she told Bloomberg. She came shopping thanks to the 13-year-old who knew the schedules and wanted something to do, she said. “Some algorithm on whatever platform he’s using — somebody got him,” she said.
Discounts throughout the store varied, with racks of kids clothing marked down 60%, though the Adidas track suits had only 25% off.
At the checkout line in the toys section, where there was no wait, the teller said the store had prepared for more shoppers, and thanked this reporter for coming.
Beware Retail Industry Stocks, Analyst Says (11:05 a.m.)
One purchase investors should think twice about during the holidays is retail stocks, says Michael Baker, an analyst at D.A. Davidson.
Don’t get him wrong, he’s bullish on the sector for 2023. But “retail almost always underperforms from the day after Thanksgiving through year end,” he said in a note to clients. “From a tactical perspective, we advise shorter-term caution on the group.”
Going back to 2010, retailer shares on average have been little changed during the holiday season, while the S&P 500 has climbed 1.8%, Baker said. And retail industry shares have lagged nine of the last 12 years. The worst performers tend to have the highest holiday exposure such as Best Buy Co. and Dick’s Sporting Goods Inc. By contrast, Lowe’s Cos. and Home Depot Inc. have been safer bets during this time of the year, he said.
In a separate report, Cowen & Co. analyst Oliver Chen named Macy’s Inc., Walmart Inc. and Ulta Beauty Inc. as his “top Black Friday holiday stocks.” Each will benefit from product diversification and value positioning, he said.
Consumers Likely to Shop Later, Cowen Says (11:01 a.m.)
US shoppers will probably return to one of their pre-pandemic habits this year: procrastination. That’s according to Oliver Chen, a retail analyst at Cowen & Co., and there’s good reason for it given the industry backdrop.
Amid last year’s supply-chain snarls, the fear of finding empty shelves prompted many consumers to stock up on holiday merchandise early in the season. Now, many retailers are struggling to pare bloated inventories, and that’s pushing them to return to pre-pandemic discounting levels. Shoppers, meanwhile, are struggling to keep up with inflation.
As a result, more US consumers will take a wait-and-see approach this year in hopes that retail prices will get even lower as Christmas gets closer, Chen said. There’s also a calendar effect, with an extra Saturday between Thanksgiving and Christmas. He predicts a holiday sales increase of 5% to 7%, down from last year’s gain of almost 14%. The five-year average is 6.7%, Chen said, citing National Retail Federation data.
Shopify Sees Bigger Thanksgiving Gain Than Adobe (9:40 a.m.)
Data from software provider Shopify Inc., which powers e-commerce platforms for small businesses, show that the average spend per cart on Thanksgiving Day was 3.8% higher than last year. That might not point to higher sales volumes, but instead increases in prices due to higher inflation.
The Shopify data also showed an increase in the number of sales made on cell phones rather than on desktops, suggesting that more consumers were looking for deals while away from their desks. The apparel and accessories category was the top seller in the US yesterday, followed by health and beauty, Shopify found.
Thanksgiving Sales Rise 2.9%, Adobe Says (9:40 a.m.)
Online sales climbed 2.9% to $5.29 billion on Thanksgiving Day, Adobe Analytics said Friday. That’s slightly ahead of Adobe’s estimate for the overall holiday season, which the company sees expanding 2.5% from last year. On Black Friday itself, Adobe predicts only a 1% increase in online sales, to $9 billion.
Taking a step back, these numbers — which aren’t adjusted for inflation — show the challenge facing retailers. The US consumer price index climbed 7.7% during the 12 months ending in October. So with e-commerce rising in the low single digits, unit sales are probably down.
Salesforce, using a different methodology, reported a more robust 9% gain in online sales to $7.5 billion. Activity jumped between 6 p.m. and 10 p.m. Eastern time and 78% of traffic came through mobile phones, suggesting that people did a lot of shopping from the couch after their Thanksgiving meals.
UK Deliveries Crunched by Postal Strike (9:40 a.m.)
One of the challenges for UK retailers this Black Friday will be how to deliver gifts bought online. UK postal workers at Royal Mail are striking over pay and conditions on Nov. 24 and 25 with further walkouts planned in the leadup to Christmas, the busiest time of year.
Amazon.com Inc., a big discounter for Black Friday, is making deliveries using e-bikes in key British cities to reduce its emissions. The online behemoth has opened e-bike delivery hubs in Manchester and London in time for the discount event. Amazon is investing £300 million ($362 million) over five years to reduce its transport emissions in the UK.
Retailers are seeking to ease the load on warehouse staff at the busiest time of year. UK electronics retailer Currys Plc has spent more than £250,000 on “robotic exoskeleton suits” to help warehouse workers spread the weight of lifting heavy loads and prevent injuries. Currys says its distribution site in Newark, England, will deliver 8.7 million units of stock this Black Friday period, with the retailer offering as much as £500 off televisions.
Pitney Bowes Says Gen Z More Likely to Buy Online (8:26 a.m.)
Half of Gen Z consumers who participated in a Pitney Bowes survey say they’ll be shopping online more this season during Black Friday and Cyber Monday than they did last year. Across age groups, one in four consumers plan to shop online more this year.
Younger consumers are more comfortable with online shopping, Pitney Bowes said in a separate report. And Gen Z is more likely to purchase from digital brands that don’t have physical stores and advertise on Instagram and TikTok.
With inflation putting the squeeze on holiday budgets, many consumers are looking online for deals. As retailers try to offload a glut of inventory, promotions won’t be hard to find.
Hot Wheels, Paw Patrol Are Top Sellers (8:26 a.m.)
In addition to tracking online sales totals, Adobe Analytics has been keeping an eye on hot sellers during the first three weeks of November. The list includes some perennial favorites such as air fryers, smart speakers and Apple iPads. The Nintendo Switch is the top-selling gaming console, while brisk-selling toys include Hot Wheels and Paw Patrol. Among categories, kitchenware sales are up 155% from October, which is a relief for retailers since home goods have been slumping this year. Also rising: buy-now-pay-later options, as shoppers’ savings accounts dwindle and inflation takes a toll.
Inditex Workers Start the Holiday Season With a Strike (8:11 a.m.)
Inditex, the owner of the Zara fashion chain, is facing two days of strikes in its home market as the holiday shopping season begins. As many as 13 shops closed on Thursday in the Spanish province of A Coruña, in Galicia, as workers walked off their jobs to demand a €440 ($458) monthly pay increase for staff earning €1,058. Unions are expected to shut most of the 44 Inditex-owned shops in the province, including a five-floor flagship Zara store in the center of A Coruña city.
The protest highlights growing demands from workers for wage increases in the face of soaring prices. In spite of the cost-of-living crisis, Inditex has been able to pass on costs to shoppers and posted its biggest profit margins in seven years in September.
Fewer Gifts Expected Amid High Inflation (7:34 a.m.)
Inflation, not the Grinch, is stealing Christmas this year. More than half (51%) of the 1,000-plus respondents to a RetailMeNot holiday trends survey say they’re coping with sky-high inflation this year by purchasing fewer gifts.
Polled shoppers plan to spend $725 for the holidays — 8% less than last year. More than a third (36%) say they’re going to use more coupons to manage higher prices. And 22% say they’re going to purchase more used items.
RetailMeNot’s data also show that 53% of respondents plan to shop on Black Friday and 55% will shop Cyber Monday. Many consumers have already started, with 52% taking advantage of pre-Black Friday deals.
E-Commerce Growth Seen Slowing (7:34 a.m.)
Retailers’ digital sales remain higher than in 2019, but growth has decelerated from the past two years, said David Bassuk, global co-head of the retail practice at consulting firm AlixPartners. Consumers are still using online channels to get a sense for what deals are available, but that won’t be the only option this year.
“The stores are back,” Bassuk said. “The importance of the sales associate in the store is increasing once again.”
Black Friday Minus Thanksgiving: UK Stays Active (7:02 a.m.)
With inflation running at the highest in more than four decades in the UK, shoppers are actively looking for bargains this Black Friday. Almost 70% of British shoppers plan to participate in the discount event imported from the US, up from 57% last year, according to McKinsey & Co. Online searches for Black Friday sales have risen by a quarter since last year.
With most people in the UK not celebrating Thanksgiving, Black Friday has morphed into a weeklong and in some cases a monthlong event. It started even earlier than normal this year as retailers try to encourage shoppers to spend. British department store John Lewis Partnership Plc and drugstore chain Boots both offered deals from the start of the month.
Adobe Sees 2.5% Growth — Without Inflation (12:01 a.m.)
A key question this Black Friday will be how much higher prices are contributing to better sales numbers.
Overall spending this holiday season is seen growing 2.5% from a year ago, compared with 8.6% last year and a whopping 32% in 2020, according to data from Adobe Inc. Those figures aren’t adjusted for inflation, meaning that sales could be down by volume given that consumer prices are up 7.7% from a year ago.
Telsey Sees Profits Amid Discounts as Key (12:01 a.m.)
Success for retailers this holiday season will be determined by which companies can maintain their discounts and still come out profitable, said Dana Telsey, chief executive officer of Telsey Advisory Group, in a Nov. 23 interview on Bloomberg Television. There’s still more inventory “to get through as we enter the holiday season, which is going to lead to good deals and good values for the consumer,” she said.
Telsey also said that brick-and-mortar sales are likely to get a big boost this year because “we have not had this type of in-person shopping for two years during the holiday season” due to Covid-19.
--With assistance from Daniela Sirtori-Cortina, Clara Hernanz Lizarraga, Katie Linsell, Brendan Case, Tiffany Kary, Jeannette Neumann, Janet Freund, Leslie Patton and Tonya Garcia.
(An earlier version corrected a month in the introduction.)
©2022 Bloomberg L.P.
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