Black Friday deals draw small crowds for US retailers

US retailers cut back sharply on Black Friday to eliminate bloated inventory, but customers responded with only modest traffic, leaving profitability uncertain for many chains.

Crowds were thin late morning at Connecticut’s Stamford Town Center mall, with a few shoppers at Kay Jewelers and just a small queue at Forever 21. A couple at a Walmart Inc. supercenter near Dallas reveled lack of crowds as they bought presents for their grandchildren. At the Stonestown mall in San Francisco, shoppers were scarce.

“It feels like a normal day,” said Miguel Martinez, 35, a warehouse supervisor who walks into a Target Corp store. on the North Side of Chicago with her 12-year-old daughter, Jaylen. Martinez said he cut cable TV and Netflix to give gifts to his four children. He described Black Friday discounts as “pretty good” buying a few Amazon Echo Dot speakers, Nerf guns and a Disney Encanto doll.

US consumers continue to spend, but are becoming more cautious after battling the highest inflation rates in four decades this year. They are also watching deals more closely, and retailers – many of whom still have heavy inventory after misjudging an erosion in demand – are trying to stand out by dangling the biggest discounts since before the pandemic.

Modest growth

The U.S. holiday shopping season is expected to see modest growth at breakeven in annual sales, said Melissa Minkow, director of retail strategy at digital consultancy CI&T. “It’s still a win,” she said, contrasting the outlook with the UK, where high inflation has prompted consumers to cut spending sharply. Still, steep Black Friday discounts are likely to squeeze retailers.

“Profits won’t be where retailers want them to be,” Minkow said. That’s partly because they “couldn’t pass on all the inflationary costs to consumers.”

Read more: Bloomberg tracks Black Friday across the country

Ecommerce spending on Black Friday rose 2.3% to $9.12 billion, according to Adobe Analytics.

That’s well below the US inflation rate of nearly 8% in the 12 months to October. Salesforce Inc. said the average consumer discount on Black Friday is expected to be over 30%, up from 28% last year and close to 33% in 2019. clothing and health and beauty.

But shoppers are reducing their purchases in response to higher prices, said Rob Garf, vice president of retail at Salesforce.

“People are just buying less product because their dollar isn’t going as far as it used to,” Garf said.

solitary environment

At Crossgates Mall in Albany, New York, low-cost brands and high-end retailers were busiest, while mid-market stores were desolate.

Gap Inc.’s Old Navy, which was offering 60% off most items, had such a long line that some shoppers turned away as soon as they entered the store.

Drawing large crowds at the high end, athleisure favorite Lululemon Athletica Inc., which had only a few shelves of discounted merchandise, and American Eagle Outfitters Inc.’s Aerie, a lingerie brand popular among shoppers of Generation Z. Meanwhile, stores like Gap’s Banana Republic, Macy’s Inc. and Urban Outfitters Inc. had no lines and only a handful of shoppers.

Healthy traffic at select retailers shows that many US consumers are still spending at a healthy pace. A crowded Best Buy Co. store near Dallas-Fort Worth International Airport had half a dozen cars stopped near the door to pick up large televisions and other electronics. Grapevine Mills, a nearby discount mall, was so crowded that Shawanda Miller threw up her hands and left.

“I don’t even want to talk about it, there were so many people in there,” Miller, 43, said. “I’ll come back another day.”

No wait

But crowds like that seemed to be an exception. The toy department checkout line at a Macy’s in Stamford, Connecticut didn’t wait, and the cashier said the store had prepared for more customers. A Walmart in suburban Dallas also had ready-to-go cashiers with no lineups, which worked well for Veronica Gonzalez and Carlos Garcia, a couple visiting from Corpus Christi, Texas.

“The nice thing is you don’t have to come at 5 a.m., and everything is here that we’re looking for,” Gonzalez said. Garcia said “it’s all for the grandkids” as he pushed a shopping cart full of linens, suitcases and toys.

The era of Black Friday crowds ended with the pandemic, and it likely won’t return as more consumers shop online and spread their spending over a longer period of time. “The historic noisy atmosphere of Black Friday may be a thing of the past,” Edward Yruma, retail analyst at Piper Sandler, said in a report.

Behind the moderate crowds are people such as Therese Pociask, 60, who shopped at Target in Chicago for her little daycare. She was also looking for gifts for her nieces and nephews. In her basket were a gift pack of Epsom salt, Fujifilm Instax camera film, three stuffed dinosaurs and a puzzle.

Pociask said she plans to spend about $2,000 over the holidays, about the same as last year. But with high inflation, his money isn’t going as far as he used to.

“I try to stay within my budget, but find I have to spend more to make it look the same,” she said.

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