Black Friday Discounts Fade as Demand and Inflation Power Ahead
It’s a combination of high demand, increasing inflation, and reduced product availability due to the global supply chain crunch. While retailers are dangling deep price cuts on some products, the overall level of markdowns is apt to enable retailers such as Macy’s Inc., American Eagle Outfitters Inc. and Kohl’s Corp. to shore up their merchandise margins, Chen said. Even though bargain hunters are frustrated, customers still spend freely.
“We’re likely to see very much more full-price selling,” Ken Perkins, founder of Retail Metrics, a researcher, said in an interview with Bloomberg TV. “Consumers have been surprisingly willing to accept price increases.”
Mastercard SpendingPulse estimates that Black Friday sales in both stores and online rose by nearly 30% between 3:00 p.m. New York Time and 2020. Retailers’ shares held up reasonably well amid a broad market selloff Friday, with the S&P Retail Select index down 1.4% while the S&P 500 lost 2.3%.
Tia Smith, a 22-year-old sales assistant at a Macy’s in Brooklyn, said some shoppers inquired about the discounts they were accustomed to before the pandemic.
“They ask me, ‘Isn’t this supposed to be 50% off?’” she said.
Some locations saw little traffic due to the scarcity of attractive bargains. Meliesha Francis (37) said that Target’s New York suburban store had less people than Black Friday before the pandemic. She came for staples such as Huggies diapers, which weren’t discounted. A trip to the Bed Bath & Beyond in the same shopping complex earlier that morning had proved equally fruitless.
“There was only one set of curtains on sale,” Francis said.
This is partly due to design. Target Corp., Walmart Inc. offered Black Friday sales weeks ago. They spread out demand over a longer duration. Last week, both companies announced strong earnings growth and gave positive outlooks on holiday spending.
“While historically we thought of Thanksgiving weekend and Black Friday as the kickoff to holiday season, in many ways it’s now halftime,” said Matt Shay, chief executive officer of the National Retail Federation.
Online spending on Thursday — Thanksgiving Day in the U.S. — came in at the low end of expectations with $5.1 billion, according to the Adobe Digital Economy Index. Adobe forecasted a $5.1 billion-$5.9 billion range earlier this week. However, the company repeated its prediction of an increase in online spending between November 1 and December 31, which is a record.
At physical stores, comprehensive foot-traffic data aren’t yet available for Friday, and overall sales could still be elevated thanks to online orders or shopping into the evening. After all, a lack of doorbusters means shoppers don’t really need to get there early.
“The chaos of past Black Fridays would actually be problematic given the inventory scarcity,” said Simeon Siegel, a retail analyst at BMO Capital Markets. “The reality is companies don’t have the units to see 2019 traffic.”
Black Friday Update: Keep up with all the action in retail over the weekend
Many customers visited the shop, regardless of final sales figures. Police began to limit the amount of vehicles allowed in a Tanger Factory Outlet located in Fort Washington in Maryland by midday. The same time, customers were leaving a packed Best Buy Co. Irving store, Texas. There was long line at the cashier and steady stream of people exiting.
“It’s better to actually see what you’re getting,” said Jorge Arriaga, 42, a supervisor at a concrete recycler who bought a 55-inch TV for about $400. “Sometimes when you order online, you open the package and it’s not quite what you were expecting.”
Craig Johnson, president of Customer Growth Partners, dismissed a lack of deals as “an urban myth,” and said plenty of stores were offering discounts of 40% to 50%.
Even though the Northeast was hit hard by rainy weather, foot traffic at the malls across the country is expected to remain strong. He said that teen shoppers have returned to Black Friday, and malls no longer open late on Thanksgiving. This drove much of the activity.
Still, many stores are finding they can pull back from the price reductions they’ve offered in the past. Abercrombie & Fitch Co. was offering 50% discounts two years ago, said CEO Fran Horowitz. Now they’re only 30%.
“I’ve been here for seven years and this is the first time we’ve been able to do 30% off since I’ve been here,” she said in an interview. “Those 20 points make an enormous difference in our bottom line, and the consumer is obviously responding nicely to our product.”
–With assistance from Deena Shanker, Tiffany Kary, Augusta Saraiva and Richard Clough.