Deals were abundant on Amazon’s website during what essentially amounted to an additional Prime Day event that was hosted in October. The month before, Best Buy began offering deals comparable to those seen on Black Friday. And on Friday, the first two hundred customers who enter each of Kohl’s shops were automatically placed into a competition for a chance to win prizes such as gift cards to Sephora and a vacation for a family of four to a Legoland resort.
Retailers are not only competing with one another in order to acquire consumers now that the crucial Christmas shopping season has arrived. In addition to that, they are battling against the clock.
For the time being, Americans are spending, which is bolstered by savings from the epidemic as well as a red-hot work market. But at the same time, costs are soaring at the quickest pace in decades, and the Federal Reserve is seeking to reign them in by increasing interest rates. This is despite the fact that costs are climbing at the fastest pace in decades. Consumers are developing a negative outlook on the economy as a direct result of efforts to reduce demand by making it more difficult to borrow money. And there is a substantial risk of an economic contraction.
Retailers, some of which are sitting on an excess of goods, want to sell as much as they possibly can while customers are still taking their wallets out of their pockets. Therefore, companies are bombarding clients with discounts in the hope of convincing them to make a purchase before a downturn in the economy causes a shift in behaviour for the second time.
Whether or if merchants are successful will have significant repercussions. There are billions of dollars at play, and businesses will be paying careful attention to the result as they make choices about hiring new employees and making investments for the new year.
On a call with analysts earlier this month, the chief executive of Target, Brian Cornell, stated that the company would spend a significant amount of time concentrating on “executing our plan,” “getting through the holiday season,” and “then assessing the consumer and the overall retail landscape as we look to 2023.”
In a broader sense, an examination of retail sales during the course of the Christmas shopping season may provide insights on the direction the economy will take in the next weeks and months.
The majority of economists subscribe to the view that consumer spending, which is responsible for around 70 percent of overall economic growth, will continue to be robust in the fourth quarter, mostly due to the fact that households will continue to save money. According to estimates provided by the Federal Reserve, as of the middle of this year, the American people had amassed a total of around $1.7 trillion in additional savings as a result of the epidemic, which was made possible in part by the assistance provided by the government.
But in September, the most recent month for which estimates are available, just 3.1 percent of after-tax income was set aside by Americans as savings. This is less than half the percentage that was set aside before the epidemic. And Americans with lower incomes are seeing their savings go much more quickly than Americans with higher incomes.
In the meanwhile, according to the Federal Reserve Bank of New York, the average balance on credit cards as of the end of the third quarter was up 15 percent from the same time a year earlier. That was the highest increase seen in more than twenty years, and it came about as a result of consumers’ growing reliance on credit despite the rise in the cost of borrowing money.
As a result of consumers taking advantage of Christmas promotions earlier than normal, retail sales increased by a greater-than-anticipated 1.3 percent in October. The sales of non-discretionary products, such as food or things connected to home improvement and do-it-yourself projects, helped boost the profitability of many big retailers, including Walmart and Home Depot, during the third quarter, and these merchants reported positive results.
According to statistics that was provided on Friday by Adobe Analytics, online retailers reduced the cost of a variety of products, including toys, gadgets, and laptops. According to statistics provided by Adobe, this year’s discounts on athletic goods and TVs were much deeper than the discounts offered the year before, while this year’s apparel prices were somewhat lower. According to Salesforce’s research, the average amount of a discount offered during Black Friday sales in the United States was thirty percent. According to Salesforce, the average percentage of a discount offered on Black Friday in 2019 was 33 percent.
According to statistics from Mastercard SpendingPulse that was published on Saturday, retail sales on Black Friday jumped by 12 percent from the previous year, while sales via e-commerce increased by 14 percent in comparison with 2021. These numbers reflect money spent not just in shops but also in restaurants and other eating establishments.
Despite this, not everyone was happy with the outcome. People expressed their disappointment on social media that the Black Friday sales weren’t as substantial as they had hoped they would be.