"Black Friday" sales show that American consumers are tightening their wallets and waiting for greater discounts, which means that retailers are facing a dull holiday shopping season and may report lackluster financial reports early next year. Consumers are spending money at a different pace this year than in years past, when holiday spending was characterized by post-pandemic splurges.
While estimates for Friday's in-store sales won't be available for some time, Salesforce Inc. U.S. online sales are expected to grow 1% year-on-year in November and December, which would be the slowest growth rate in at least five years. The software company said Thanksgiving sales were in line with those numbers, and sales appeared to accelerate on Friday.
Some shoppers said Friday's discounts were hard to impress and may hold out until retailers offer bigger discounts.
Shoppers line up outside a Best Buy store in Union City, Calif., on Friday.
That's partly because retailers have recently done a better job of squeezing excess merchandise. Jessica Ramírez, an analyst at Jane Hali & Associates, said in an interview that this year "the pressure to sell inventory is not as great as last year."
Other data firms' sales forecasts for the holiday shopping season are similarly bleak. Adobe expects U.S. online revenue to grow 4.8% year-on-year in the next two months. Although the growth rate is higher than last year, it is far lower than the average annual growth rate of 13% before the outbreak. Mastercard predicts that U.S. online and physical store retail sales will increase by 3.7% this year compared with last year. This is back to pre-pandemic growth rates.
Vivek Pandya, principal analyst at Adobe Digital Insights, said in an interview that consumers are "very price conscious now."
Still, many shoppers celebrated the unofficial start of the holiday shopping season on Friday.
Personal savings are falling from their pandemic-era highs, and while inflation is slowing, many items are still more expensive than they were a few years ago. Rising interest rates have also pushed up home and car prices. Consumers have to make choices.
However, Michelle Meyer, chief U.S. economist at MasterCard Economic Research, pointed out that after experiencing chaotic shopping experiences in recent years, consumers' regression can be regarded as returning to a more normal shopping rhythm. Sales forecasts for this year point to a "return to a more balanced economy," she said in an interview. Unemployment remains low, she added. "Consumers have the spending power."