U S retailers discounted heavily on Black Friday to clear out bloated inventories but customers respond d with only modest traffic, leaving profitability in doubt for many chains.
Crowds were thin in the late morning at Connecticut ’s Stamford Town Center mall, wit few shopper s at Kay Jewelers and just a small line at Forever 21. A couple at a Walmart Inc. supercenter near Dallas reveled in the lack of crowds as t hey bought presents for their grandchildren. At the Stonestown mall in San Francisco, shoppers were few and far between.
“It feels like a normal day,” said Miguel Martinez, 35, a warehouse super visor walking through a Target Corp. s tore on Chicago’s North Side with his 12-year-old daughter, Jaylen. Martinez s aid he’s been cutting back on cable TV and Netflix to afford presents for his four children. He described the Black Friday discounts as “pretty good” as he pic ked up a couple of Amazon Echo D ot speakers, Nerf guns and a Disney Encanto doll.
Brick-and-mortar retailer s, which were hit hard by Covid-19 closures and shoppers seeking to avoid the virus, saw in-s tore traffic tick up 2.9% this Black Friday compared to 2021, according to preliminary data compiled by Sensormatic Solutions. US consumer s are still spending, bu t they ’re growing more cautious after contending this year with the highest inflation rates in four decades. They’re also keeping a sharper lookout for deals, and retailers — many of them still heavy with inventory after misjudging erosion in demand—are trying to stand out by dangling the deepest discounts since before the pandemic.
Modest growth
The US holiday shopping season is likely to se e modest to break-even growth in annual sale s, said Melissa Minkow, director of retail strategy at digital consultancy CI&T. “ That ’s still a win,” she said, contrasting the outlook with the UK, where high inflation has caused consumers to pull back noticeably on spending. Still, the steep Black Friday discounts are likely to squeeze retailers.
“Prof it s will not be where retailers want them to be,” Minkow said. That’s in part because t hey “couldn’t pass all of the inflationary costs of f to consumers.”
E- commerce spending on Black Friday rose 2.3% to $9.12 billion, according to Adobe Analytics.
That’s far less than the US inflation rate of almost 8% during the 12 months ended in October. Salesforce Inc . aid the average consumer discount on Black Friday was expected to be greater than 30%, up from 28% last year and close to the 33% rate in 2019. The biggest discounts were in h ome appliances, apparel and health and beau t y.
Shoppers are cutting back in reaction to higher prices, said Rob Gar f, Salesforce ’s vice president of retail.
“ Pe ople are ju st plainly buying le ss products bec ause t heir dollar isn’t going as far as it used to,” Garf said.
Lonely middle
At Crossgates Mall in Albany, New York, lowcost brands and higher-end buzzy retailer s had the most foot traff ic, while the middle-market store s were de solate.
Gap Inc.’s Old Nav y, which was off ering 60% off most items, had a li ne so long that some shopper s turned around as soon as they entered the store.
Drawing big crowds at the higher end were athleisure favorite Lululemon Athletica Inc ., which had only a few racks of discounted merchandise, and American Eagle Outfitter s Inc .’s Aerie, a popular intimates brand among Gen Z shoppers. Meanwhile, stor es like Gap’s Banana Republic, Macy’s Inc. and Urban Outfitters Inc . had no lines at all, and only a handfu l of shoppers.
The healthy t raff ic at some retailers shows that many US consumer s are still spending at a robus t clip. US retail sales on Friday were up 12% year-over-year, excluding automotive, according to Mastercard SpendingPulse, which measures in-store and online purchases ac ross all forms of payment. The spending increase is not adjusted for inflation.
At a crowded Best Buy Co. store near Dal – las-Fort Worth International Airpor t had half a dozen cars pulled up by the door to pick up large televisions and other ele ctronic goods. Grapevine Mills, a nearby discount mall, was so crowded that Shawanda Miller threw up her hands and left.
“I don’t eve n want to talk about it, it was so crowded in there,” said Miller, 43. “I’m going to come back another day.”
No wait
But crowds like that appeared to be an exception. The checkout line at the toy section at a Macy ’s in Stamf ord, Connectic ut, had no wait and the cashier said the store ha d prepar ed for more shoppers. A Walmart in suburban Dallas also had c ashier s standing at the ready with no lines, whic h was just f ine wit h Veronica Gonzale z and Carlos Garcia, a coup le visiting from Cor pus Christi, Texas.
“ What ’s good abou t it is you don’t have to come in at 5 o’clock in the morning, and everything is here that we’re looking for,” Gonzalez said. Garcia said “ever y thing’s for the grandkids” as he pushe d a shopping cart full of bed sheets, su itcases and toys.
The era of Black Friday crowds came to a halt with the pandemic, and it probably isn’t coming back as more consumers shop online and spread their spending out over a longer period. “ The historic raucous atmo spher e of Black Friday may be in the pas t,” Edward Yruma, a ret ail analyst at Piper Sandler, said i n a report. Behind the moderate c rowds are people such as Therese Poc iask, 60, who was sho pping at Target in Chicago for her small daycare center. She was also looking for gif t s for her nieces and nephews. In her cart were an Epsom-salt gi ft pack, Fujifilm Instax camera f ilm, three st uf fed dinosaurs and a puzzle.
With assistance from Leslie Patton, Deena Shanker, Martine Paris, Tiffany Kary and Victoria Cavaliere / Bloomberg