Optimism Prevails for Black Friday and Holiday Season but Gains Will Be Minimal
David Moin
10 min read
With sales momentum at their backs and a compressed calendar ahead, most retailers are anticipating a decent turnout for Black Friday and the holiday season despite the nation’s ongoing angst over inflation.
The revenue gains won’t be large, but retailers feel abetted by pumped-up loyalty programs, increased use of AI to trigger promotions and flash sales, and their sharper values this season, aware they need to offer and do more to get consumers to their stores.
The strong stock market should encourage spending; so should weather conditions for the most of the country, and there’s also less uncertainty in the air, with the presidential election decided.
U.S. retail sales increased 0.4 percent in October from the previous month, and 2.8 percent from October of last year, according to the Commerce Department, indicating economic expansion driven by consumer spending and suggesting robust economic performance in the fourth quarter. Results in clothing, furniture and drug stores were weak, while automobile sales and restaurants were strong.
Black Friday sales will grow 2 percent year-over-year, generating $39.7 billion in U.S. retail sales, according to a Coresight Research report issued last week.
Christmas Shopping Begins Early
“This represents moderated growth compared to 2023, when Black Friday sales grew 2.5 percent year-over-year,” wrote Coresight analyst Sunny Zheng. “The later timing of Black Friday this year has prompted consumers to shop early.”
According to Coresight survey data, 52.3 percent of consumers starting their holiday shopping before November. That’s up 8 percentage points from a year ago. “Events in October, such as Amazon’s Big Deal Days, Target’s Target Circle Week and Walmart’s Holiday Deals, resonated with consumers, with the October timing encouraging a pull-forward of demand and likely impacting traditional holiday sales days, such as Black Friday,” Zheng wrote.
With 26 days between Thanksgiving and Christmas this year, compared to 31 last year, retailers launched holiday campaigns and Black Friday deals in early November and in some cases as far back as October. That got many people shopping early.
Mood Swings
While weak third-quarter sales results from Target, Kohl’s and Macy’s over the last two weeks dampened the holiday spirit somewhat, a brighter mood emerged from the much better results reported by Gap, Abercrombie & Fitch and Walmart, which all raised their performance outlooks for 2024, suggesting confidence that the fourth quarter will be a good one.
“Consumers are absolutely spending,” said Marc Rosen, chief executive officer of JCPenney, which launched early access to Black Friday deals on Nov. 8. “We’ve seen strong results from the launch, and this past week was good too,” Rosen said, regarding holiday shopping. “Consumers are still feeling the stress of inflation — the higher prices at grocery stores and at the gas pump — but at the same time they are spending for value.”
“As far as the holiday goes, we are off to a strong start,” said Fran Horowitz, CEO of Abercrombie & Fitch, during a conference call Tuesday with retail analysts, just after A&F reported robust third-quarter sales and profit gains. “We have had a strong start to November, and we are ready to compete around the world this holiday season…For the upcoming holiday, our customers will see a lot of exciting newness and a variety of gift-giving and gift-yourself ideas across categories, coupled with compelling marketing campaigns in digital and social…The holiday season is a key moment for our stores, and we are investing in both new and existing locations to support the great traffic and productivity trends we’re seeing. We are well staffed in our stores. We are well staffed in our DCs (distribution centers). We’re ready to go.”
Gap Inc. has also experienced “a strong start” to the holiday season, CEO Richard Dickson told WWD last week after the company reported healthy third-quarter sales and profits. “Based on the results, we are gaining strength as we enter the holiday season. We are confident with our assortments.”
“We are really excited and positive for both Black Friday and the holiday season,” said Stephen Lebovitz, president and CEO of CBL & Associates Properties, the Chattanooga, Tenn.-based real estate investment trust with a total of 94 malls, and outlet, lifestyle and open-air centers, primarily in the Southeast and Midwest.
“With the shortened season, we should start to see holiday sales pick up soon,” said Lebovitz. “I think Black Friday is going to be a huge day.” CoolSprings Galleria in Franklin, Tenn.; Friendly Center in Greensboro, N.C.; Hamilton Place, in Chattanooga, and Mayfaire in Wilmington, N.C., are among CBL’s top properties.
Low-single-digit Gains Seen
The ICSC forecasts a 3 percent to 3.5 percent retail sales gain for the industry this holiday season. The ICSC also predicts that 241 million consumers, 6 million more than in 2023, will shop for gifts. Gift cards, apparel, accessories and jewelry will be the most popular purchases, according to the ICSC’s Holiday Intentions Survey, which indicates that 58 percent of those Americans will select gift cards for their families and friends; 52 percent will seek out apparel, accessories and jewelry, and 50 percent will shop for toys, games, sporting goods and goods tied to other hobbies.
Similarly, the National Retail Federation earlier this month predicted that holiday spending during November and December in the U.S. will grow between 2.5 percent and 3.5 percent, totaling $979.5 billion to $989 billion in sales.
According to the annual survey released last week by the NRF and Prosper Insights & Analytics which provides consumer intent data, a record 183.4 million people are planning to shop in stores and online from Thanksgiving Day through Cyber Monday. The figure is up from last year’s record of 182 million, and is 18.1 million more than five years ago. The survey, conducted Nov. 1 to 7, asked 8,135 adult consumers about their holiday shopping plans and has a margin of error of plus or minus 1.1 percentage points.
“Even though holiday shopping continues to pull forward, some of the busiest shopping days of the year are during the five-day Thanksgiving weekend,” said Katherine Cullen, NRF’s vice president of industry and consumer insights.
Black Friday remains the most popular day of the year to shop, with 72 percent of those surveyed planning to visit stores or shop online. Sixty-five percent of Black Friday shoppers expect to specifically shop in stores that day. Cyber Monday is the second most popular day, with 39 percent of those surveyed planning to shop on that occasion.
Fifty-eight percent of those surveyed said they already started their holiday shopping as of early November. On average, holiday shoppers have completed one-quarter of their planned purchases. Consumers also anticipate giving experiences as gifts, with 25 percent of those surveyed gifting dining experiences, 14 percent gifting personal services, and 16 percent gifting other experiential activities. The ICSC survey, conducted online from Sept. 23 to 25, reached a demographically representative sample of 1,009 U.S. shoppers.
Doorbusters Back in Style
Placer.ai, a location intelligence and analytics platform that tracks foot traffic and consumer behavior, predicts a strong return to early doorbusters on Black Friday, and strong use of AI flash sales to create real-time, personalized discounts. Placer.ai also predicts that the beauty category will “steal the show” on Black Friday with limited-edition beauty bundles.
Software giant Adobe predicts that U.S. online sales will hit $240.8 billion this holiday shopping season, defined as Nov. 1 to Dec. 31, representing 8.4 percent growth over the 2023 season, when consumers spent $221.8 billion online. Shopping on mobile devices is expected to hit a new milestone, contributing a record $128.1 billion and growing 12.8 percent over last year.
Adobe also predicted that during Cyber Week, which runs from Thanksgiving through Cyber Monday, Black Friday will see the most growth at 9.9 percent, generating $10.8 billion online. Thanksgiving Day will see the second most growth online at 8.7 percent ahead of last year to $6.1 billion, followed by Cyber Monday at 6.1 percent ahead of last year’s $13.2 billion.
Generally, the weather will be conducive to hitting the malls. According to Planalytics, from Nov. 29 to Dec. 1, cold temperatures will blanket the Northwest to the East Coast and are expected to drop below normal and last year. That bodes well for winter clothes and accessories. Seasonable to warm temperatures will continue across pockets of the southern tier, while a large winter storm is expected to sweep across the country during the weekend, with rain and snow likely for a large portion of the central and eastern U.S. Some snow could impede traffic over parts of the North Central and the Northeast regions, according to Planalytics, which helps retailers gauge demand based on weather forecasts and analysis.
Black Friday shoppers in New York City’s Bryant Park Winter Village last year.
Rosen at Penney’s said the company relaunched its rewards program back in the spring putting twice as many rewards in the hands of consumers than what they had the year before. Last fall, Penney’s launched its “Thursday Night Football” promotion where “some really incredible values have been driving traffic.” Also, 2 million new customers were added to the database as a result of the Thursday deals. Among them: $125 men’s suits in all sizes, private labels and brands. On Black Friday, Penney’s will offer a limited number of golden totes with a coupon for an extra 10 percent off anything and everything they buy through Dec. 24, no matter how many times they shop.
“In terms of promotional activity overall, I would say it’s probably similar to last year, but we feel very confident we have the best deals in the market for Black Friday,” Rosen said. “To a large extent it’s about the value they find — great fashion, not necessarily the lower prices.”
In terms of how traffic in the stores could play out, Rosen suggested that due to there being fewer days between Thanksgiving and Christmas this year, there will be more of a last-minute rush near Christmas “but we’ve been seeing people start shopping (for gifts) as early as October and November.”
A holiday outfit from JCPenney.
Typically, there’s a lull in the retail business after Cyber Monday until about 10 to 14 days prior to Christmas. But Rosen said that he expects “less of a lull” after Cyber Monday due to the compressed calendar.
The Paradox
While optimistic for holiday, CBL’s Lebovitz, when asked about the consumer mindset, replied, “There seems to a fair number of mixed signals. Consumer spending has remained very strong, despite talk about inflation and consumers having heavier debt loads. We just look at the results and are encouraged. Our third-quarter sales are one-and-a-half percent up and traffic has been higher at most of our malls through the year. Traffic is up low-single digits, and across the regions it’s been consistent. Consumers seems to be voting with their feet and wallet and support spending.”
He said legacy brands, including Gap and Abercrombie, have been strong, and American Eagle Outfitters has experienced “a strong bounce-back. Those are all important retailers in our portfolio.”
Category-wise, Lebovitz cited ongoing strength with cosmetics and activewear, and for the most part restaurants have done well, he said.
“There’s no question prices are higher but people are still getting out and spending. There’s a paradox.”
Shoppers on Black Friday in New York City in 2019.
