© Reuters. FILE PHOTO: Shoppers are reflected in a Black Friday sign outside a shop in Singapore November 22, 2023. REUTERS/Edgar Su
By Katherine Masters, Helen Reid and Arriana McLymore
NEW YORK/LONDON/DURHAM, N.C. (Reuters) -Retailers around the world were banking on discounts to pull in millions of shoppers on Black Friday, the kickoff to the key holiday shopping season, against a backdrop of financial pressure on households in the U.S., Europe and elsewhere.
With many consumers squeezed by persistent inflation and high interest rates, U.S. holiday spending is expected to rise at the slowest pace in five years. Most major retailers slashed their seasonal hiring.
A record 130.7 million people are expected to shop in stores and online in the U.S. on Black Friday this year, the National Retail Federation (NRF) estimates. The event is known for crowds lining up at big-box stores at dawn to scoop up discounted TVs and home appliances.
But at 6 a.m. on Friday at a Walmart (NYSE:) in New Milford, Connecticut, the parking lot was only half full.
“It’s a lot quieter this year, a lot quieter,” said shopper Theresa Forsberg, who visits the same five stores with her family at dawn every Black Friday. She was at a nearby Kohl’s (NYSE:) store at 5 a.m.
U.S. shoppers plan to spend an average $875 on holiday purchases – $42 more than last year – with clothing, gift cards and toys at the top of most shopping lists, according to a survey of 8,424 adults conducted in early November by the NRF, a U.S. retail trade group.
“It’s going to be the worst Christmas,” said Jill Lizzo, a homemaker from Harlem, who said she’s had to raise her holiday budget by $500 this year.
“Black Friday has turned into an expensive affair, by the time you buy two products it’s already $100.”
Lizzo, shopping at a Target on the upper east side of Manhattan, said she’s in the market for a Barbie dollhouse and a Lego toy set for her daughter, but is considering whether to buy both. Holding jumpsuits and winter wear, she said she found kids’ clothing, toothpaste and Christmas decorations cheaper this year, offering some relief to her budget.
“I didn’t buy much last year, I’m glad I saved up that money,” Lizzo said.
The Black Friday tradition began in the U.S. but has gone global, as well as moving online.
In France, Italy, and Spain, most shoppers planned to buy clothing on Black Friday, with electronic goods coming second, according to a PwC survey. On average, shoppers in France planned to spend 295 euros ($322), PwC found, with 65% of purchases expected to be made online.
In the UK, transaction volumes were up just 1.4% in the week to Wednesday compared to a year ago, according to Barclays, a bank that sees nearly half the country’s credit and debit card transactions.
“Recently, Black Friday hasn’t been the greatest,” said Naomi Ojomo as she browsed for dresses in a Zara store in Canary Wharf in east London, adding that discounts are less enticing due to many other sales throughout the year.
The rise of online shopping has reduced the importance of Black Friday as a single-day event. Retailers from Macy’s (NYSE:) to Amazon (O:) now launch deals as early as October, and often offer additional discounts closer to Christmas, Macy’s CEO Jeff Gennette told investors this month.
Shoppers spent a record $5.6 billion online on Thanksgiving Day, data from Adobe (NASDAQ:) Analytics showed, a 5.5% increase in online spending compared to last year, in line with projections.
Thanksgiving Day discounts online peaked at about 28% for toys, while electronics had discounts as steep as 27%, Adobe said. Barbie dolls, Marvel action figures, Playstation 5 and videogame “Call of Duty: Modern Warfare III” were hot sellers.
Adobe expects Black Friday to have the best deals on televisions, with discounts of 22%. Clothing, appliances, sporting goods and furniture will also have deep discounts but prices will go even lower by Cyber Monday.
Some retailers hold their biggest markdowns for the Thanksgiving holiday weekend, and big-box players including Walmart, Lowe’s (NYSE:) and Home Depot (NYSE:) maintained or deepened their advertised discounts.
Whether those deals will attract inflation-weary consumers is the biggest worry for retailers. Some top-selling products on previous Black Fridays have been hit hardest by the downturn in discretionary spending, said Mari Shor, a senior equity analyst at Columbia Threadneedle Investments.
Best Buy (NYSE:) is offering between $100 and $1,600 off electronics including laptops, flat-screen TVs and KitchenAid mixers after telling investors this week that shoppers are holding off on big-ticket purchases.
A downturn in luxury spending prompted department stores including Bergdorf Goodman and Nordstrom (NYSE:) to offer steep discounts on items such as Balenciaga shoes and Oscar de la Renta earrings.
British retailer Argos said the PlayStation 5 gaming console, Beats wireless headphones, and Apple (NASDAQ:) AirPods were among its top-selling products on Black Friday.
Megan and Mike Humphrey were browsing the toy aisle in a Raleigh, North Carolina, Target for Lego sets, Pokémon cards and dolls. The Humphreys purchase toys every year for their 11-year old and 8-year old. Black Friday is the only day the couple has time for holiday shopping.
“We try to spend the same dollar amount on each kid,” Mike Humphrey said.
($1 = 0.9168 euros)
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