Black Friday: retailers concerned about buyer spending levels

The Retail stores will begin on Friday the unofficial start of the season Christmas shopping with a series of discounts and other attractions.

But executives are increasingly concerned about a slowdown in spending that could dampen sales the day after Thanksgiving, as well as during the Christmas period.

Buyers, buoyed by a strong labor market and steady wage growth, had shown a resilience that confounded economists and contradicted the bitter sentiments expressed in opinion polls.

Such spending, although cautious, came despite higher supermarket prices and higher borrowing costs.

But consumers are now under more pressure from dwindling savings, rising debt Credit cards and still persistent inflation.

In fact, shoppers cut back on spending in October, ending six straight months of gains.

Shoppers have had some relief as inflation eases, but many goods and services such as meat and rent remain much higher than just three years ago.

The latest quarterly results from several retailers, from Walmart until Best Buy, have shown the weakened consumer. Walmart said it noticed shoppers reduced spending in October and offered a subdued annual sales outlook.

Best Buy, the country’s largest retailer, said shoppers are opting for cheaper TVs. And according to Target, shoppers are waiting longer to purchase items.

For example, instead of buying sweatshirts or denim in August or September, they held out until the weather cooled down.

“It is clear that consumers have been remarkably resilient”Target CEO Brian Cornell told analysts last week. “However, in our research, things like uncertainty, caution and budget management are most important.”

Even luxury retailers are noticing that their shoppers feel financially tight.

“We are taking a measured approach. There has been some relaxation”said Marc Metrick, CEO of Saks, the independent online business of Saks Fifth Avenue. “I don’t think (the holiday season) is going to be a horrible business or that it’s going to be some kind of blowout holiday season.”

The National Retail Federation, the largest retailer in the country, expects shoppers to spend more this year than last year, but their pace will slow given all the economic uncertainty.

The group has predicted that Christmas sales in USA They will increase between 3% and 4% from November to December, compared to 5.4% growth a year ago.

The pace is consistent with the average annual vacation increase of 3.6% from 2010 to 2019 prior to the pandemic.