Holiday spending at weakest in 5 years as shoppers focus on deals, not splurging

Black Friday events appeared to draw lackluster crowds this year, with shoppers laser-focused on discounts and bargains after holding back spending ahead of what is expected to be the weakest holiday season in five years.

The National Retail Federation expects overall sales to increase by 3% to 4% in November and December — the slowest pace in five years — compared to the 5.4% increase last year and the 12.7% spike in 2021 following the depths of the pandemic.

At 6 a.m. on Friday at a Walmart in New Milford, Conn., the parking lot was only half full, according to Reuters.

“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 store at 5 a.m., according to the news service.

Between mid-October and mid-November, inflation-battered consumers spent 7% less than a year ago as they bought 6% fewer items versus a year ago, according to research firm Circana. Target and Macy’s are among the big chains that have seen sales drops of late.

“Consumers have kind of held back,” Circana’s chief industry advisor Marshal Cohen told CNBC.

Retail experts say spending will be higher during Black Friday, Cyber Monday because most consumers are waiting for this promotional period to do their shopping.

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Retailers are bracing for modest growth as shoppers continue to grapple with high prices for everything from groceries to the rent to the gasoline in their cars. Lower income consumers are especially hard pressed to find deals.

“They had savings from stimulus checks that’s run off now,” Richard Baum, managing partner of Consumer Growth Partners told The Post. “They do not have a lot of discretionary income to spend and have less this year than last year, even though inflation is starting to ease.”

In one telling sign of the prevailing mood on Friday, “the outlets are busier than the full price malls,” noted retail consultant Gabriella Santaniello, who has a team of retail checkers at key shopping centers across the country.

Shoppers are waiting for big discounts to open their wallets this holiday season.

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Shoppers spent a record $5.6  billion online on Thanksgiving Day, data from Adobe 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.

BestBuy is expecting its comparable store sales to decline by 3% to 7% in the all crucial fourth quarter, the company said on the earnings call last week.

“We are preparing for a customer who is very deal focused,” BestBuy CEO Corie Barrie said on the call.

Holiday spending has been muted so far this year.

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Walmart’s financial chief John David Rainey said on a Nov. 16 earnings call, “As we enter the holiday season, we’re working hard to lower grocery prices to ease the pressure for customers, giving them more capacity for general merchandise spend.”

Among the chief factors contributing to the gloomy outlook is rising consumer debt. Credit-card balances have reached a 10-year high and student loan payments have resumed after a pandemic hiatus.

It’s not just budget-minded shoppers who are worried about their finances.

Those who shop at luxury retailers like Neiman Marcus are also holding back.

The Dallas-based retailer said this week that its sales declined by 8% in the most recent quarter ended Oct. 28.

By one measure, holiday spending will rise a whopping 13% during the Black Friday and Cyber Monday period.

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“The consumer has become increasingly cautious and the luxury sector remains highly promotional,” chief executive Geoffroy van Raemdonck said, according to a Dallas Morning News report.

As shoppers focus on snagging bargains, some experts are expecting spending during the promotional Black Friday, Cyber Monday period to be robust.

Consumers plan to spend an average of $567 during the peak discount period, up 13% from last year, according to a Deloitte survey.

But to stay within their spending limits, many consumers plan to do most of their holiday shopping early, with four in 10 expecting to finish their shopping during next week, according to the survey Bloomberg reported.