Black Friday sales are well underway, with inflation-fatigued consumers looking to snag markdowns on everything from pantry and toiletry staples to jackets, makeup and gaming consoles.
Although predawn lines and door busters are a thing of the past as sales stretch for months, Black Friday still kicks off a weekend that delivers steep discounts. And sales are especially important for consumers this year as grocery, housing and energy costs continue to climb— not to mention tariffs driving up prices for prime gift categories, including apparel, TVs and toys.
“Black Friday represents to the consumer the time when they feel that everybody’s got their best deals out there,” said Marshal Cohen, chief retail adviser at market research firm Circana. “This year — probably even more than last year — the consumer is looking for good deals. They need them.”
Will Auchincloss, who leads EY-Parthenon’s Americas retail sector, noted that most of that spending growth will reflect higher prices, not consumers buying more than last year: “We expected that to be about two-thirds, based on price, and one-third on volume, roughly,” he said. “So it’s really expected to be a modest holiday season for the sector.”
The holiday season is already off to a slower start, with October spending lagging that of the past two years, Cohen said. General merchandise sales, for example, were down 1 percent in dollars and 3 percent in units over last year, and 10 percent in dollars and 9 percent in units over two years ago, according to Circana.
John Mercer, who oversees global and data-driven research at Coresight, pointed to waning consumer sentiment in light of the government shutdown and unimpressive markdowns during sales events from Amazon, Target, Walmart and other big box stores. (Amazon founder Jeff Bezos owns The Washington Post.)
This weakness is also seen in September’s retail sales, which increased only 0.1 percent (excluding gas, cars and food services) month-over-month and below economists’ estimates, according to a U.S. Census Bureau reportreleased this week.
More broadly, cracks in consumers’ continued resilience are starting to show. In quarterly earnings reports from retail, consumer goods and apparel brands this month, executives described cautious shoppers feeling gloomy about the economy and bogged down by tariffs, political tensions, still-high interest rates, an uncertain job market and the rising cost of essentials.
Economists also warn of a widening gap between lower- and higher-income consumers. Working-class shoppers — who are experiencing slower wage growth, a shakier job market and dwindling savings — are disproportionately vulnerable to rising prices and other economic pressures eroding their purchasing power, industry analysts say.
To cope, consumers are being savvy — holding out for discounts and making trade-offs, including shopping at more affordable stores, forgoing dining out and abstaining from impulse buying a new pair of shoes or throw pillows.
Retail industry insiders still expect shoppers will push through the holiday season because they’re not willing to sacrifice gift-giving or the holiday spirit even if budgets are tight, said National Retail Federation chief executive Matt Shay. So they “save for it; they plan for it; they prioritize it.”
The NRF projects that holiday spending will surpass a record $1 trillion in November and December, an increase of between 3.7 and 4.2 percent over the same period last year without adjusting for inflation. That’s slower than last year’s 4.3 percent growth but in line with pre-pandemic levels.
At least 86 percent of consumers plan to buy gifts this year, according to an October Gallup poll, and on average, they expect to spend $1,007, just a few dollars short of last year.
Adobe Analytics projects the steepest discounts for TVs, toys and appliances will roll in Friday, with markdowns on electronics, apparel and computers having their moment on Cyber Monday. The average discount will hover around 28 percent off original prices, Cohen said. (Shoppers should also know that not all promotions are created equal and that some discounts are marketing ploys.)
“Now with a consumer that is so promotionally driven, this really is the year for retailers to try to make Black Friday as meaningful as possible,” said Elizabeth Lafontaine, director of research at foot-traffic analytics firm Placer.ai.
Katie Thomas, who runs the Kearney Consumer Institute, expects Americans will do less shopping for themselves to prioritize loved ones. For lower-income family households with millennial parents, David Tinsley, senior economist at the Bank of America Institute, expects baby-boomer grandparents to step in to do much of the gift giving.
Essentials and gift cards
Meanwhile, consumers are increasingly doing more of their Black Friday-Cyber Monday shopping online. Adobe Analytics projects Americans will spend $43.7 billion online from Thanksgiving through Cyber Monday, a six percent increase over last year. Overall online spending in November and December could reach $253.3 billion — a more than 5 percent increase year over year without adjusting for inflation, according to Adobe.
Generative AI is also a growing trend this year. Shoppers are turning to the tool to provide personalized suggestions and compare prices from different retailers. In the first three weeks of November, usage of chatbots surged 830 percent compared to the same period last year, according to Adobe. Those shoppers are also 30 percent more likely to buy something.
So far this month, Americans have been snapping up Fisher-Price Little People, Mini brand capsules, K-pop Demon Hunter toys, Hatch alarm clocks, red light therapy masks, movie projectors and Bluetooth headphones, according to Adobe.
But shoppers are also leveraging the markdowns to stock up on household essentials like shampoo, toothpaste and foods staples — a trend that ramped up during the October sales events when Walmart and Amazon promoted markdowns, Cohen said. Adobe Analytics projects online grocery sales alone will drive $23.5 billion in revenue, a 9.3 percent year-over-year increase.
“Consumers are prioritizing their spending in a bigger way than we’ve seen in years past, which basically means food, and other grocery products and pharmaceutical products are on the top of the list,” he said.
Gift cards continue also to be a popular gift, with cash-strapped shoppers leaning on them to stay under budget, said Tom McGee, the chief executive of ICSC, the trade group formerly known as the International Council of Shopping Centers.
“It speaks to the price consciousness, and it gives the flexibility of the person getting the gift to spend it on whatever they want, which includes essentials,” he said.
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