From spreading out payments to dodging impulse purchases, holiday shoppers this year took a more judicious approach to spending over the Black Friday-Cyber Monday sales weekend, recent data shows.
Underscoring this trend, “buy now pay later” services such as Klarna, Affirm, Afterpay and PayPal Pay Later are increasingly popular among consumers of all income levels — whether shoppers are looking for convenience or seeking to spread out their budget, according to David Tinsley, a senior economist at the Bank of America Institute. Most customers are “light users,” he said, meaning they have about one to four transactions in their account, he added.
The services drove $747.5 million in online spending on Black Friday, an almost 9 percent increase over last year, according to Adobe Analytics. That’s about 6 percent of what Americans spent online that day. And usage was already ramping up throughout November. In the first 23 days of the month, it was up more than 10 percent year over year, equating to a $600 million boost.
Meanwhile, PayPal reported its BNPL transactions increased 23 percent year over year in the days leading up to Black Friday.
“Consumers are planning ahead, prioritizing value, and making the most of how they spend their money,” Michelle Gill, the general manager of small business and financial services at PayPal, wrote in an a news release on the rise of BNPL.
Another factor is that these services are becoming more widely available each year at checkout. “BNPL could also just be going up because e-commerce is going up,” said Sucharita Kodali, an analyst at Forrester.
Preholiday caution
More broadly, the rising cost of groceries, housing and energy — as well as tariff-induced price increases on core gifting categories including apparel, toys and electronics — has forced consumers to be savvier when their dollar isn’t going as far, analysts said.
“People are being cautious,” Kodali said. “The other shoe is going to drop any day now — the economy from a retail standpoint has been really positive … and this can’t go on forever.”
While the National Retail Federation forecasts spending in November and December will break a record $1 trillion — an increase of between 3.7 and 4.2 percent over the same period last year — that doesn’t mean people are buying more, rather that things are costing more, analysts say.
Still, there were signs of strength. Online sales on Black Friday reached $11.8 billion, according to Adobe Analytics. That’s a 9.1 percent surge over last year and surpasses Adobe’s forecast of $11.7 billion. But in-store shopping slumped. Visits to malls and downtown areas on Black Friday fell a respective 2.5 percent and 2.6 percent compared to last Black Friday, according to MRI Software, which tracks pedestrian traffic. Small Business Saturday mall visits fell 4.3 percent while downtown traffic dropped 6 percent.
RetailNext, which tracks in-store traffic for more than 560 brands, recorded a steeper decline. Visits fell 3.6 percent on Friday and 8.6 percent on Saturday.
The slowdown doesn’t mean consumers weren’t spending, said Joe Shasteen, global head of advanced analytics at RetailNext, but a shift in how they intended to spend.
“Shoppers showed they’re done with the impulse-driven, one-day frenzy,” he said in a news release. “Prices, tariffs, and tighter budgets pushed people to shop with discipline, not adrenaline, and they responded by turning Black Friday into a value calculation.”
Consumers also took advantage of markdowns on everyday essentials. Among the top product categories from Shopify sellers were vitamins and supplements, followed by skin care and activewear. Adobe Analytics projects online grocery sales will drive $23.5 billion in revenue, a 9.3 percent year-over-year increase.
“We’re seeing promotions on essentials and the things that the consumers feel that they need first,” said Marshal Cohen, chief retail adviser at market research firm Circana. “When they have the opportunity to buy grocery and pharmaceutical products at a discount, they’re going to do so.”
But that doesn’t mean all shoppers are avoiding more exciting gifts.
“Santa Claus is going to show up — and is he going to show up with vitamins? Yeah. But he’s also going to show up with a toy here and there,” he said.
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