Holiday shopping begins with inflation dampening spirits

NEW YORK – While Black Friday will mark a return to familiar patterns of holiday shopping, uncertainty still remains.

The US labor market remains strong, consumer spending is robust and inflation is slowing. But higher prices for food, rent, gasoline and other household expenses have taken a toll on shoppers.

As a result, many are reluctant to spend when there aren’t big sales and are more selective about what they buy – in many cases trading down to cheaper items and less expensive stores.

Buyers are also dipping more into their savings, turning more and more to “Buy now, pay later” services such as Afterpay, which allow users to pay for goods in installments and top up their credit cards at a time when the Federal Reserve is raising rates to cool the US economy.

Such financial difficulties can force buyers to look for bargains.

Isela Dalencia, who was shopping for essentials like laundry detergent at a Walmart in Secaucus, N.J., earlier this week said she was putting off buying holiday gifts until Cyber ​​Monday — the Monday after Thanksgiving — when online sales pick up. She will then again wait until the week before Christmas to get the best deals, unlike last year when she started shopping before Black Friday.

“I shop less,” Dalencia said, noting that she will spend about $700 on holiday gifts this year, a third less than last year.

Kathy Leach, a social worker in Manhattan, also browsed the aisles at Walmart, but said she will begin her holiday shopping in the first week of December as usual. This time, however, she’ll be relying more on bargains, her credit card and buy-now-pay-later services to get through the shopping season due to skyrocketing food and other household expenses.

“The money doesn’t go as far as it did last year,” Leach said.

This year’s trends are different from yesteryear, when consumers shopped earlier for fear of not getting what they needed due to supply chain disruptions. Stores didn’t have to do deep discounts because they were struggling to deliver.

But some pandemic habits persisted. Many retailers that closed stores on Thanksgiving and instead offered discounts on their websites to reduce in-store crowds are still following that strategy despite the return to normal.

Major retailers, including Walmart and Target, are closing their stores again for Thanksgiving. And many turned away from the doors, deeply priced items that were offered for a limited time and drew crowds. Instead, discounted items are available throughout the month, on Black Friday or over the holiday weekend.

Against today’s economic backdrop, the National Retail Federation — the largest retail trade group — expects holiday sales growth to slow to a range of 6% to 8%, down from a staggering 13.5% growth a year ago. However, these figures, which include online spending, are not adjusted for inflation, so actual spending may even be lower than a year ago.

Adobe Analytics expects online sales to grow 2.5% between Nov. 1 and Dec. 31, up from last year’s 8.6% pace when shoppers were uncertain about returning to brick-and-mortar stores.

Analysts see the five-day Black Friday weekend, which includes Cyber ​​Monday, as a key barometer of shoppers’ willingness to spend, especially this year. The two-month period between Thanksgiving and Christmas accounts for about 20% of annual retail sales.

While Black Friday still has a strong presence in the U.S. among shoppers, it has lost ground over the past decade as stores opened on Thanksgiving and shopping shifted to Amazon and other online retailers. Stores further diluted the day’s status by promoting Black Friday sales throughout the month. This year, stores started sales earlier than last year to force shoppers to spread out their purchases.

Many shoppers, like Lalita Cardero of Brooklyn, New York, aren’t looking forward to Black Friday.

“I shop early, trying to get things on sale, discounts or clearance — and I use coupons,” Cardero said. “I’ve never done Black Friday. I hear it’s a mess and people are hurt.”

Still, some experts predict Black Friday will once again be the busiest shopping day of the year, according to Sensormatic, which tracks customer traffic. Consumers have also returned to shopping in brick-and-mortar stores amid easing concerns about COVID-19. In fact, more stores opened than closed in the U.S. last year for the first time since 2016, and that gap is only widening this year, according to Coresight Research, a retail consulting and research firm.


AP personal finance writer Cora Lewis contributed to this report.


Follow Anne D’Innocenzio:

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, copied or distributed without permission.

Source link

USA News