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Early Read on Black Friday: Strong Foot Traffic Drives Out-of-Stocks

Though a new covid variant is rattling markets around the world, many shoppers showed up at stores on the hunt for Black Friday deals.

The early read indicates that foot traffic appears to be solid, if somewhat lower than pre-Covid holiday seasons. And the season’s earlier start this year could have something to do with footfall coming in below target.

On the heels of supply chain issues, inventory was lean in certain apparel categories, and deals were harder to find. Moreover, the Omicron coronavirus variant could drive in-store shoppers back online if the highly mutated strain reverses progress authorities made tamping down the pandemic in recent months.

Black Friday in the US

Retailers’ efforts to jumpstart holiday sales in October seem to be bearing fruit. “I feel like this holiday shopping season started before Halloween,” said Brian Ehrig, a partner and operations expert on the apparel and retail industries at global strategy and management consulting firm Kearney. “Retailers were pretty promotional back in October [and many consumers] have been worried for weeks about getting their Christmas presents. So, they’ve been ordering well before Thanksgiving to make sure that they’ve got them in time. I don’t feel like that’s a behavior that I’ve seen in the past.”

So how did Black Friday shape up for stores?

“Visibly, it seems like people are getting out there in the cold and shopping, but maybe not like back to what it was,” said Ehrig, commenting on his visit to Tennessee’s Mall of Green Hills in Nashville. “It was hard to find a parking spot, and that was my first way to judge if people actually have been doing physical shopping again, so it seems very positive.”

Ehrig said Black Friday foot traffic was noticeably busier than when he visited the same mall a week ago. He noted the challenge of find a parking spot, although it wasn’t quite as difficult as when he had to “hunt around forever” in years’ past.

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Ehrig also had some trouble “finding the right sizes” of clothing at some specialty stores, indicating potential inventory challenges. A check in 10 stores indicated that the retailers seemed well staffed, and store associates readily offered to place “endless aisle” orders and have out-of-stock items delivered to a customer’s address.

As for incentives, Ehrig said some of the stores promoted big holiday discounts of 30 percent to 40 percent off, comparable to holidays past. One other store had a big sale, but “it wasn’t on every item. It wasn’t like everything’s 40 percent off. I guess they were holding back on their best sellers, knowing that they don’t need to discount those items,” he said.

Most of the early mall shoppers were women—about 80 percent—on Friday morning. With inventory on some items in short supply, Ehrig expects that the final weeks of the holiday season will see consumers “leaning more towards things like gift cards and buying of services as opposed to products.”

But because of lingering uncertainty over what items might still be arriving late, he said there could be some “unexpected sales or maybe deeper discounting” in the final week or days before Christmas.

Kathy Gersch, founding member of management consulting firm Kotter International and former vice president and chief marketing officer at Nordstrom Inc., said retailers are stocking two different types of inventory: an assortment that was already in place that stores were trying to move, and the hot, hard-to-get items hit by the supply-chain crisis.

“What you’ll see from a lot of retailers this Black Friday is them trying to clear certain merchandise with extra discounts, and not just focus on the hot items. It’s their way of trying to manage that inventory balance,” she said.

While some retailers have said they were open to possibly canceling orders if goods sitting in containers couldn’t be unloaded in time for the holidays, neither Ehrig nor Gersch has heard of any cancelations so far.

Coresight Research founder and CEO Deborah Weinswig was monitoring sales in stores in the Boston and Providence, R.I., areas. “I continue to believe this will be the strongest-margin quarter retailers have ever had,” she said. Weinswig didn’t see “great deals” due to lower inventory levels and inflation. In addition, fashion basics such as denim, khakis, underwear and socks were “shockingly out-of-stock,” she said, adding that many consumers appear to be near the end of their holiday shopping and have turned their attention to buying for themselves.

Weinswig noted strong traffic at department stores, while on-mall centers showed stronger traffic than off-mall, and off-price discounters seemed to be running low on inventory.

The TJXs and Burlingstons of the world might be holding back for later in the season when consumers who have finished with malls and department stores turn their attention to off-price for additional bargains. Nordstrom Rack, however, is already facing low inventory in premium brands and key categories such as women’s apparel and shoes. The parent to Marshalls and TJ Maxx is confident it’s ready for the peak season, with inventory either already delivered or scheduled to arrive in time for the holidays. Ross has receipts flowing in over the next six weeks, although home goods might still be stranded at ports or on container ships.

By the afternoon. BDO’s partner and retail and consumer practice leader Natalie Kotlyar had been to Long Island’s Roosevelt Field and Americana Manhasset shopping malls.

“Consumers wanted to get back to normalcy by shopping at stores and actually buying. I saw lots of consumers with shopping bags, and the ones who love to shop on Black Friday were back in the stores,” she said. Because of capacity concerns at some of the smaller stores, such as some footwear retailers, consumers were willing to wait on long lines outside for their turn inside the stores.

Kotlyar said she didn’t see much curbside pickup at either location, and the discounts were moderate, more along the 30 to 40 percent off range, not like years past when some discounts were as high as 60 or 70 percent off. “That’s due to supply chain issues. Some retailers are able to pass the increased costs to consumers, but for those who can’t, they also aren’t able to provide substantial promotions because there’s only so much margin erosion they can withstand,” she said.

Echoing Ehrig’s observation, Kotlyar noticed that many retailers were light with in-store inventory, resulting in in-store associates helping consumers place orders online and providing free shipping for items not in stock. Kotlyar expects the rest of the holiday weekend will continue to see strong sales heading into Cyber Monday.

“I saw a lot of apparel and footwear purchases. People were coming back into the stores to touch and feel the products, things they can’t do when shopping online. It’s different for a phone or air fryer. For apparel and footwear, people need to feel the product,” she said of the increase traffic at malls this year.

For home goods, Black Friday promotions for over 20 retailers indicated that in the broader home category, year-over-year discounting is down for most companies, according to Jefferies hardlines retail analyst Jonathan Matuszewski. “This isn’t surprising, given many management teams don’t expect inventory levels to normalize until mid-2022 or later,” he said.

Consumers were back to in-store shopping on Black Friday, but significant discounts were hard to find and apparel inventory was lean.
Tyler Post, of Orwigsburg, Pa., left, puts shopping bags from Kohl’s in their trunk after his father Jeffrey Post opened it on Black Friday at the Fairlane Village mall in Pottsville, Pa., on Friday, November 26, 2021. Jacqueline Dormer/Republican-Herald via AP

Promotions were “mostly down” at online e-tailer Wayfair, with categories showing lower discounts in bedding, curtains and drapes, and flat discounts year-over-year in area rugs and tabletop, Matuszewski. One outlier was Bed Bath & Beyond, which was offering 25 percent off this year, versus 25 percent off in-store and curbside pickup and 20 percent off online last year.

Black Friday overseas

Black Friday has become an important shopping day overseas as well. While not necessarily a public holiday, retailers have taken the concept of the American shopping day to leverage the event as a way to drive sales.

According to data from Statista earlier this month, the majority of Black Friday/Cyber Monday shoppers in Brazil said they preferred purchasing online and having the items delivered to their homes. Twenty-two percent said they will choose in-store shopping.

In Europe, a report in Wanted in Rome earlier this week said four out of five Italians plan to make a purchase between Black Friday and Cyber Monday, spending an average of 235 euros ($265.90) per consumer, up from 157 euros ($177.65) last year. And The Guardian in the U.K. reported on data from Barclaycard, one of U.K.’s biggest debit and credit card issuers, indicating that payments were up 23 percent between midnight and 5:00 p.m. Friday as shoppers spent over one-fifth more than last year. Sales of apparel and leisure categories offset lower volumes of toys and home goods, although there are other reports that shoppers were also facing higher price points amid concerns over shortages. Separately, word surfaced on Friday that the luxury fashion designer label Roland Mouret has slipped into administration. The designer fashion label earlier this month had indicated that it planned to appoint administrators.

Online sales data

Sales data reports from Salesforce, Adobe and Pitney Bowes indicate a strong start for the holiday season.

Data from Salesforce  showed that Black Friday shoppers spent $5.8 billion in the U.S. online as of 12 p.m. ET, up 7 percent from the same time last year. It also found that U.S. retailers ramped up digital marketing campaigns Friday morning with a 57 percent year-over-yar increase in emails and texts before noon. Consumers responded to the personalized promotions versus generic messaging, with two times higher growth at up 16 percent versus up 6 percent, respectively. The most popular categories were luxury handbags, and active and general footwear merchandise.

Salesforce had projected a Black Friday spend of $12.9 billion, reflecting a flat growth rate year-over-year, and on top of the $6.9 billion spend on Thanksgiving Day. It also found that U.S. consumers shopped early this year, with sales for the first three weeks of November totaling $74 billion, or up 10 percent year-over-year. Global online spend is projected at $62.8 billion, or flat growth year-over-year, on top of the $30.7 billion spent on Thanksgiving Day.

An Adobe report Friday morning analyzing consumer transactions online across one trillion visits to U.S. retail sites, 100 million stock keeping units and 18 product categories shows that consumers spent $5.1 billion on Thanksgiving Day, representing the low end of Adobe’s forecast for a spend of between $5.1 billion and $5.4 billion. The company projected that consumers would spend between $8.8 billion and $9.6 billion on Black Friday. For the full holiday season from Nov. 1 to Dec. 31, the online data firm affirmed its prediction that online sales will hit $207 billion, based on current trends and representing both a new record and a 10 percent increase year-over-year.

“Today, consumers will see deeper discounts and more items in stock as retailers release their best deals of the season. Popular products including computers, apparel, appliances and sporting goods are already seeing strong discounts this morning, so today is an excellent day to dig in on your holiday shopping,” Taylor Schreiner, director at Adobe Digital Insights, said on Friday.

In addition, Adobe also said that retailers have redirected their marketing to focus on in-stock items. The categories with the biggest Black Friday discounts so far include toys, averaging discounts of 22 percent, and apparel at discounts of 16 percent off. As for the balance of the weekend, Sunday is expected to see heavy discounts for sporting goods and apparel.

And data from Pitney Bowes found that more than 55 percent of consumers started their holiday purchases early. Those early shoppers have also completed nearly half, at 47 percent, of their planned purchases. Millennials were more likely to have started shopping at 64 percent, while Gen Z shoppers, at 39 percent, are holding out the longer to make their purchases. Among the most popular shopping categories online were apparel, footwear and accessories.

Looking ahead, survey data from ICSC found that 64 percent of consumers plan to shop on Saturday, known as Small Business Saturday, with 47 percent in physical stores and 34 percent online. In addition, fifty-four percent said they plan to shop on Sunday, with 37 percent heading to a store, 45 percent shopping online and 18 shopping in both channels. As for Cyber Monday, 74 percent said they plan to shop that day, with 18 percent in a store, 68 percent online and 13 percent buying in both channels.