Black Friday Volume Misses Expectations

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Uneven Spending

This holiday season, big spenders mask those who aren’t spending.

Covid’s Omicron emergence will likely exacerbate the gap.

Workers carry more leverage than ever before. But that doesn’t mean it’s the same everywhere.

Driven by uncertainty, lower-income consumers continue to hold back spending.

It takes years to change that psychology, something that didn’t happen until nearly a decade after the Great Recession.

Higher sticker prices also make them less likely to shell out for gifts.

Without typical deals on Thanksgiving and Black Friday, these consumers aren’t incentivized to head to the stores.

This likely contributed to lower year-over-year Black Friday sales for the first time ever.

That said, as we note in our main story, discount retailers like TJ Maxx (TJX) are doing extremely well at the moment.

And if low-income consumers are likely to spend anywhere, it would be at discount retailers like TJ Maxx.

Retail Sales

Black Friday Volume Misses Expectations

Key Takeaways

  • 2021 foot traffic was well below 2019.
  • More sales moved online and were spread out throughout the month.
  • Trends such as Buy-Now-Pay-Later (BNPL) and mobile purchases grew as a percentage of total sales.

Shoppers returned to brick and mortar stores on Black Friday this year.

The National Retail Federation predicted an 8.5%-10.5% increase in holidays sales vs 2020, putting total sales for November & December at $843.4 & $859 billion respectively.

However, data from Adobe Analytics, Mastercard, and RetailNext paint a gloomy picture for retail.

 

The Bad

  • Brick & mortar traffic increased 61% on Black Friday vs 2020 but came up 27% short of pre-pandemic levels.
  • E-commerce sales hit $8.9 billion compared to $9.0 billion from 2020 marking the first time ever comps failed to exceed the prior year.
  • Thanksgiving Day traffic saw a +90% decrease in stores as companies from Target (TGT) to Walmart (WMT) kept stores closed.

The Good

  • Overall Black Friday sales increased 12.1% vs 2020.
  • Most retailers declined to offer heavy discounts this year.

Trend Changes

BNPL, mobile shopping, and curbside pickup usage all hit record levels this year.

Retail analysts aren’t sure Black Friday sales paint an accurate portrait.

Many customers chose to order well in advance of the holidays to ensure on-time order delivery, spreading out spending over a longer period.

Companies like Amazon set up deals at the beginning of November to spread out order traffic.

Additionally, the heavy movement towards online retail favors Cyber Monday over traditional Black Friday deals.

Adobe predicts Cyber Monday sales to land between $10.2–$11.3 billion today, around the $10.9 billion spent last year.

The Bottom Line: Don’t take the lackluster Black Friday sales as a harbinger of doom. The bigger picture won’t be revealed until midway through December.

Yes, companies like Gap (GPS) and others struggled to contain inflation and supply chain problems.

But others are doing remarkably well, especially discount retailers like TJ Maxx (TJX).

Keep an eye on the retail ETF XRT as a proxy for the sector health.