Shoppers broke records this holiday weekend, but inflation took its toll

Washington Post

Shoppers spent big over a record-breaking five-day holiday shopping weekend, shelling out more than ever on the year’s premier online shopping day.

Consumers spent $35.4 billion online over the five-day period, according to data from Adobe Analytics. On Cyber Monday – the biggest shopping day of the long weekend – sales hit a record $11.3 billion, a 5.3% jump from last year, while online Black Friday sales ticked up 2.3% to $9.12 billion.

U.S. shoppers also spent on Thanksgiving and the weekend, with sales hitting $5.3 billion on Thursday and a combined $9.6 billion on Saturday and Sunday.

The figures are not adjusted for inflation, which has been hovering at decades-high levels, experts note. That suggests consumers could be spending more for less.

“If inflation is up 8% and sales are up 5% or so, people are definitely buying less – there’s no question about that,” said Forrester analyst Sucharita Kodali. She cautioned that without in-person sales numbers, it’s hard to see a full picture.

Still, there’s some bright news for retailers. It seems more people are opening their wallets and searching for deals before peak gift-giving season hits.

A record 196.7 million people shopped over the weekend, according to the National Retail Federation. That “shattered expectations by more than 30 million,” according to the trade group’s president and chief executive, Matthew Shay.

“Black Friday is a very big day, and this continues to be a very important bellwether for the consumer psyche as well as the strength of our economy,” Shay said during a media call Tuesday, adding that the numbers reflect a promising enthusiasm from shoppers.

Shay said the numbers reflect an “enormous resurgence” of shopping at physical stores. But foot-traffic data from the analytics firm Placer.ai found that visits to indoor shopping malls on Black Friday were down 2.3% compared with last year, while outlet malls recorded a 3.9% decline and open-air lifestyle centers were down 0.5%.

The retail federation reported that 130 million people shopped online over the weekend, a modest increase from last year’s 128 million. More people than ever shopped on their phones this year, according to Adobe Analytics, accounting for 55% of online sales.

Shopify, which tracks online and in-store data using its commerce platform, reported record sales from Thanksgiving Day through Cyber Monday – 52 million consumers globally spent $7.5 billion on Shopify merchants, a 19% increase over last year.“Consumers voted with their wallets over Black Friday [and] Cyber Monday by shopping with independent businesses,” said Shopify President Harley Finkelstein. “The future of commerce is on any surface, whether that’s shopping online or in store.”

Part of this could be because smaller merchants have been gaining share by utilizing the internet, Forrester’s Kodali said.

Still, it’s unlikely retailers will see the same boost as in the past two seasons, when there was more of a rush to spend on shopping during the height of the pandemic. Now, inflation is weighing heavily on family’s budgets and a tumultuous stock market has put some people’s savings in question. Consumer confidence slipped again in November, reaching a four-month low. The Conference Board, which releases the consumer index report, said inflation and interest rate hikes are the top threats to consumer confidence and economic growth.

But holiday shoppers have become savvier – hunting for deals, comparing prices and taking advantage of buy-now-pay-later offerings. Transaction data from Afterpay from Black Friday to Cyber Monday showed a 120% growth over last year. Adobe Analytics reported that over the five-day shopping period, there was an 85% increase from the week before.

The highest-performing shopping categories were clothing, toys, gift cards, electronics and media, including books and video games, according to Phil Rist, the executive vice president of strategy at Prosper Insights and Analytics.

With holiday season underway, retailers face a possible resurgence of supply chain snarl-ups reminiscent of last year. The looming threat of a rail strike is sparking fears that freight train stoppages could “have a ripple effect across the economy,” Shay said.

Retailers have been preparing for a possible strike since September, when a strike was narrowly averted. But a complete shutdown would strain the rest of the supply chain.

“Any slowdown, stoppage and delay … will put pressure on the other distribution centers, which are already trying to recover from the pandemic,” Shay said.