As a result of some early estimates for Black Friday, there is a sense of optimism in the air. Black Friday sales are expected to climb by a robust 15% year over year, according to Mastercard SpendingPulse, while Walmart anticipates that its United States division will register a 3% same-store sales increase in the fourth quarter.
However, the former retail analyst in me feels that companies and investors will have a somewhat quiet holiday buying season for one major reason: inflation continues to be an ever-present concern on the minds of customers.
Therefore, a 15% increase in Black Friday sales is a large call inside of an economy that is hardly growing, and Walmart’s projection is rather ambitious given that the cost of Thanksgiving meal will be 20% higher this year. This view is supported by other data, including: In a recent study conducted by Goldman Sachs, over 55 percent of respondents indicated that as a direct result of the hard financial environment, they intend to purchase fewer products this year. Some consumers intend not only to reduce their overall spending but also to switch to lower-quality goods and services offered at more affordable prices.
According to the findings of yet another survey conducted by Citi, respondents from all income levels indicated that they intended to spend less money in the future, with the largest percentage of respondents indicating that the decision was made because they had less money to spend in addition to high prices for fuel and food.
According to what shop executives have been telling me, it makes perfect sense.
Target’s Chairman and Chief Executive Officer Brian Cornell told me, “I think we’re going to be operating in an environment that’s highly uncertain.” “A consumer who is obviously struggling to keep track of their finances, and they are likely to be looking for discounts. Therefore, we will be getting ready for that.”
John David Rainey, the Chief Financial Officer of Walmart, told me that customers are “searching for value,” as if to imply that the shopper will pass up an item if the value equation isn’t satisfactory. When Best Buy releases their earnings later this week, I believe you will find that they are just as gloomy.
All of these topics and more will be covered in depth during my “Rockin’ Retail Special,” which will be broadcast live today at 2:00 p.m. Eastern Time. At the Oculus in New York City, I’ll be working alongside an all-star cast of retail industry veterans, including Mickey Drexler, who formerly served as CEO of Gap and J. Crew.
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