Similar to China’s Double 11, Black Friday is traditionally the hottest shopping day of the year in the United States. Based on 85% of shopping data from the top 100 U.S. Internet retailers, Adobe Analytics said Black Friday online sales in the U.S. hit a new high of $9.12 billion, about three to four times the average daily online sales during the non-peak period, and up 2.3% from a year ago, beating expectations of 1%. Online spending on Thanksgiving, the day before Black Friday, also hit a new high of $5.29 billion, up 2.9% from a year earlier.
While the brick-and-mortar sales increased substantially, it still failed the expectation of 18% growth. Due to sporadic rainfall in some parts of the US on Black Friday, the number of visitors to offline stores, although up from last year, is still lower than pre-pandemic levels. In-store traffic grew 2.9%, closed mall traffic grew 1.2% and open-air retail traffic grew 4.7%, resulting in a lower-than-expected 12% increase in brick-and-mortar sales.
One of the contributors to the rising sales of Black Friday is definitely coupons, which is indeed a key factor driving year-over-year sales growth, despite inflationary pressures on consumers. Typically, Black Friday offers a selection of items at below-average prices that are specifically produced for sale. The goal is to offer impressive discounts on a few select items to lure consumers into the store and hope they buy other items that are marked down less or not bought at all, explained by a report from Forbes.
The picture of retail performance is more complex than a single number. Given the macroeconomic pressures on consumers right now, it’s hard to argue that any of the winners in the retail sector will stay that way for the rest of the quarter. But some trends stand out.
Walmart is emerging as the top destination for U.S. consumers looking for Black Friday discounts. When U.S. consumers searched online for Black Friday discounts, Wal-Mart dominated. Searches for Walmart’s Black Friday discounts soared 386% year-over-year, outpacing rival Amazon.
Walmart’s strategy is to try to attract new customers at a faster pace, and it has been running a fairly aggressive promotional campaign recently, as well as cutting its Walmart+ membership fees in half. Walmart can capture more hearts and minds than Amazon’s ever-rising fees.
“Lululemon, Abercrombie & Fitch, American Eagle, and Victoria’s Secret are the biggest winners this Black Friday, in our view,” Morgan Stanley’s analyst Kimberly Greenberg, wrote in a recent report. “Hollister, Gap Banner, and Banana Republic are relative losers.”
Morgan Stanley’s findings revealed several key trends among the winning retailers over the long holiday weekend.
“Such strong traffic was achieved despite discount activity being below the industry average,” analysts said. “In our view, this means that these retailers’ categories could resonate with consumers and allow these banners to generate relatively more profitable Black Friday revenue.” “
As for loss-making retailers, analysts added that their stores have seen weak traffic amid increased discounting, which could ultimately set the stage for poor fourth-quarter profits.
Among all the items, electronics were the top choice for online sales, with purchases 221 percent higher than the average daily volume last month, according to Adobe Analytics.
Consumers were lured by deeper discounts on electronics on Thanksgiving. The group expects discounts of 27 percent on electronics, 18 percent on computers, and 13 percent on TVs on Black Friday. Digital cameras, smartphones, and other higher-priced electronics attracted some consumers’ interest during Thanksgiving and Black Friday. Major electronics retailers such as Best Buy have been dealing with the impact of inflation on discretionary purchases this year, which has led to slumping sales and increased demand for markdowns ahead of the holidays.
Other popular products are toys (up 285 percent), smart home products (up 271 percent), sports equipment (up 218 percent), and sound equipment (up 230 percent). Drones, Apple MacBooks, and Dyson products, including vacuum cleaners and the Airwrap hairdresser, were among the top sellers.
Some analysts believe that while consumers are interested in categories with rising inventory levels, inventories are likely to remain high for the near future.
Simply put, a family can only buy so many large-screen TVs in two to three years. As a result, retailers that continue to grow in these categories may struggle to shift large amounts of excess inventory, even by offering deep discounts to consumers. Given the many unknowns on the supply and demand side, it may be difficult to predict the timing of a resolution. Given the nature of retail, however, it is natural to assume that many items could end up in deep discount stores or even in landfills to make room for new products.
In addition to electronics, toy companies such as Hasbro also experienced inventory problems during the 2022 shopping season. In October, the toy giant reported a 31 percent drop in operating profit in its consumer products division, in part because of an increase in inventory.
Despite strong sales during Thanksgiving and Black Friday, inventory problems in most categories are likely to persist into the New Year.
Whether retailers can count on easing the challenges they face during the 2022 shopping season really depends.
“The big retailers will do well. For some retailers that are able to provide deep discounts in digital, toy, or sport niches, it may be easy while for others it may be a tough time. So inventory problems are definitely going to be a challenge.”, a financial and shopping expert Natalie Warb from a US coupon site CouponBirds, explained.
Overall, this year’s Black Friday has come to an end. It was the biggest Black Friday ever for online sales, thanks to big discounts from major retailers. However, to truly maximize profits, retailers still need to properly handle the challenge of inventory problems.