Black Friday Blues: Unpacking the Evolution of Consumer Spending During Festivities

Black Friday, one of the busiest shopping days of the year, has always been highly anticipated by both retailers and consumers. In recent years, the landscape of Black Friday has shifted, with more shoppers turning to online platforms to find the best deals, using alternative payment options and also a major difference on the type of goods purchased compared to past years. This shift is further evidenced by the significant increase in e-commerce spending on Black Friday.

KEYPOINTS

• Consumers are still spending, even with inflation going on. Purchasing power and spending growth is stronger this year.
• Less foot traffic in stores, but E-commerce sales going up.
• Significant spending shift towards sporting goods
• Consumers will be seeking for more deals

Consumers Are Still Spending In Spite of Inflation

• Household spending, measured using BAC (Bank of America) aggregated credit and debit card data, increased by 2.3% on Black Friday compared to the same day in 2022.
• In the week ending November 25, the increase in card spending was 1.7% higher than the same period last year.
• There’s a notable decrease in new private label credit card account openings in 2022, which is about 15% down from 2021. This indicates that consumers are smarter than ever. They are more conscious about interest rates and where their money is going.
• CD rates have started to decrease, indicating a potential expectation of interest rate cuts in the near future.
• Shoppers are still price-sensitive due to last year’s record inflation and interest rates. The Adobe survey reveals that $79 million of the sales came from consumers who opted for the ‘Buy Now, Pay Later’ flexible payment method, which will not cause immediate financial strain to their pockets.
• Mastercard’s analysis of this year’s Black Friday sales reveals an interesting trend – in-store sales rose just over 1% compared to online sales, which grew by over 8% from the previous year.
• Decreased foot traffic in physical stores might be a signal to a cooling labor market and may impact retail sales, but interestingly, online sales have shot up!
• People are less visiting stores, but they are spending online. $5.3 billion sales were made from mobile phones. People are more comfortable to shop at the comforts of their homes.

This data clearly shows that despite inflation, consumers are still spending their money, regardless of what foot traffic data shows, and inflation does not seem scary to consumers anymore, because they are actively seeking better deals. Everything is at the tip of their fingers.

A record of $9.8 billion was spent online on Black Friday, according to data from Adobe Analytics. That’s up 7.5% from last year! But, how is this happening? It looks like consumers have cracked the code. The economic apocalypse is not happening anytime soon, and post pandemic, purchasing power is still in their hands. Consumer confidence is going strong and economic indicators have shown great improvements due to lower gasoline prices and rising stock prices.

Discount and Bargain Hunters

Consumers know that it is only a matter of time for prices to drop every now and then. They know sales and discounts are inevitable. So what do they do? They wait. They wait for the best deals and offers before making their purchases. This strategic mindset has contributed to the growth in Black Friday e-commerce spending.

• For retailers that didn’t see the performance or engagement they expected, there are likely plenty of good days ahead before the holiday season wraps up. Consumers will be looking for more deals closer to Xmas and even boxing day.
• Consumers now prefer the convenience of online shopping, where they can easily compare prices and secure the best deals. Retailers have recognized this shift and are actively trying to capture deal-hunting consumers.
• Companies like Best Buy and Lowe’s have announced higher discounting levels, while Target and Ulta Beauty have introduced pop-up promotions offering 24-hour discounts on specific brands and items.

“Never underestimate the consumer, they’ve been very resilient. They will shop. They have obligations to family and other loved ones that they’re going to fulfill the gift list for. If not now, it will get busy out there — be ready, they’ll be coming.” Michael Brown, Partner, Kerney

Michael Brown, Kerney Partner

A Hike in Sporting Goods

Data has shown that consumers are purchasing sporting goods, now more than ever. This evolution could be the turning point of Ozempic being more widely used as a weight loss remedy in the market. The prophecy is happening, more consumers are now weight conscious and their spending patterns are moving towards a more active lifestyle, and major retailers know it too.

• Athletic Retailers like Under Armour, Foot Locker, Nike were slightly more promotional compared to last year.
• Specialty retailers, especially in athletic apparel and footwear, saw significant increases up to 3.5% in spending over the years.

As apparel business owners, we highly recommend you to take these spending patterns into consideration to maintain the business flow of your shop.

• As retailers adapt to the changing landscape of Black Friday, the challenge lies in capturing the attention of deal-seeking consumers and providing enticing offers to ensure customer loyalty and retention.
• Apart from carrying out strategic marketing games for the best offers and promotions on your products, it is extremely crucial to provide “Buy Now Pay Later” payment options for your customers. This convenience has shown a hike of 47% since last year, noting that consumers prefer this option and will attract more customers. (link to bnpl article)
• It is also the time to reflect about what and where consumers are spending their money on, and with recent data showing a rise in sporting goods, you might want to clear inventory on plus size items, as consumers are leading a much healthier lifestyle. Ozempic is taking its course as what research has predicted.

Black Friday e-commerce spending has reached new heights. The paradigm shift of consumers’ behaviour will also shape spending patterns in the future. With the rise of e-commerce, it is essential for retailers to have a strong online presence and a seamless shopping experience to meet the demands of today’s price-conscious consumers, not only during holiday seasons, but all year round. It’s simple, a great online platform will convert into better sales for your business. Seize the moment and level up your online printshop and take your apparel business to greater heights.