Black Friday draws U.S. shoppers but many shun stores for online
CHICAGO (Reuters) - Black Friday bargain hunters braved the cold to purchase Christmas gifts. However, they were surprised to find that many U.S. retailers had reduced prices this year due to tight supply.
Fears of COVID and fewer "doorbuster” sales reduced crowds on the day following the U.S. Thanksgiving holiday. This kicks off the year's holiday season.
The World Health Organization also named the newly discovered omicron coronavirus variant as a "variant concern" on the same day. This triggered worldwide panic and an immediate sell-off in the U.S. stock markets.
According to Cowen analysts, Black Friday saw the lowest levels of clearance items in five years or longer. Many customers prefer to buy merchandise curbside, rather than going inside shops.
Black Friday retail sales increased by 29.8% over 2020, according to Mastercard SpendingPulse. ET according to Mastercard SpendingPulse.
Up to 9 p.m., consumers spent $6.6 billion. ET Friday, according Adobe Digital Economy Index. The index expected total spending to be between $8.8 billion - $9.2 billion.
Walmart (WMT.N) and Target (TGT.N) stood to outperform other retailers in part because of their buy-online-pick-up-at-store services, Cowen said. Target increased its "drive-up" parking space by more than 18,000, nearly doubling the number of spaces compared to last year. According to Target, its most popular Black Friday deals include $219.99 for a KitchenAid professional mixer that sells for $429.99 and up to $60 off Apple Watches or AirPods.
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Target, Walmart, and Best Buy are all expected to report lower fourth quarter profit margins due to tight inventory and higher labor, raw material, and freight costs. According to Forrester Research analyst Sucharita Kodia, "Even though the holiday season is expected to be good from a sales perspective -- since retailers are discounting less -- margins won’t necessarily be greater because of inflation."
Americans are entering the holiday season with cash in their pockets thanks to multiple rounds of government panademic relief and double-digit wage rises as businesses compete for workers. Read more Yet, retailers lured shoppers to holiday shopping as early as September because of the supply-chain logjam that prevented them from replenishing year end merchandise quickly.
A Deloitte survey found that people spent between 80% and 85% of their holiday gift budgets before Black Friday. According to Adobe Digital Economy Index, November and December will see record online sales of $207 billion. This is 10% more than last year. The National Retail Federation forecasts that combined brick-and mortar and online holiday sales will reach $843.4 billion to $859 billion, an 8.5% to 10.5% increase over last year.
Elver Gomez, 21, a Chicago student, stated that he couldn't find the Apple or Microsoft laptops he was looking for while shopping at Best Buy on Friday morning. It seems like this year it's either unavailable or on sale for a "not too high price," he stated. Best Buy posted a warning message on its website about "limited quality" and "no refunds."
According to Adobe, electronics was the most out-of-stock due to a global shortage of chips. Personal care and home and garden followed closely. Out-of-stocks rose 261% in November compared to 2019.
