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NRF: Holiday Weekend Incremental Not Transformative

A record 196.7 million Americans shopped in stores and online from Thanksgiving Day through Cyber Monday, with Black Friday keeping its crown as the most-favored day for in-store shopping.

According to the National Retail Federation, about 72.9 million consumers headed to brick-and-mortar stores on Black Friday, up from 66.5 million last year. In second place was Saturday, known as Small Business Saturday, with 63.4 million in-store shoppers, up from 51 million last year. Black Friday was also the most popular day for online shopping, continuing a trend that began in 2019, according to NRF. About 87.2 million shopped online, in line with 2021 data. Also in line with year-ago levels, 77 million users shopped online on Cyber Monday. NRF said a record 59 percent of online Cyber Monday shoppers used their mobile device, up from 52 percent in 2021.

NRF’s data points were based on a survey conducted with Prosper Insights & Analytics. The record 196.7 million shoppers was an uptick of nearly 17 million from 2021, representing the highest figure since NRF first began tracking the data point in 2017. Prosper’s survey showed that over 122.7 million people visited brick-and-mortar doors over the weekend, up 17 percent from last year. The number of online shoppers also grew, but at a slower pace. This year saw 130.2 million online shoppers, representing a 2 percent increase over 2021.

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The Prosper survey also found that consumers spent an average of $325.44 on holiday-related purchases—with $229.21 earmarked specifically for gifts—over the five-day weekend, up from $301.27 in 2021. The top gifts purchased were apparel and accessories, cited by 50 percent of those surveyed. Rounding out the top three categories were toys at 31 percent and gift cards at 27 percent.

In a media briefing on Tuesday, NRF president and CEO Matthew Shay said 2022 “continues to be an unpredictable year, and very different from the last two holiday seasons.”

“Consumers are out shopping, but they’re out shopping when they see deals and when they get the promotions that meet what it is they’re looking for. And so you can get them engaged, but you’ve got to deliver value and price,” he said.

While NRF didn’t exactly walk back on its 6 percent to 8 percent forecast, Shay did clarify that those figures were unadjusted for inflation. “We all recognize that calculating the real inflation adjusted growth number is much more complicated than simply subtracting inflation from nominal retail sales growth,” Shay said, adding that other factors include individual areas of retail having their own levels of inflation and the fact that consumers experience inflation in different ways depending on what they’re buying.

And while in-store traffic levels were higher this year, the Prosper survey couldn’t detail actual conversion rates. Shay referred to the holiday weekend as a period that’s “incremental as opposed to transformative.” He described consumers as being on a “journey of exploration as opposed to necessarily purchasing” and that the period is now more a midway point rather than the kickoff to the holiday season as in years past.

There have been reports—including one from the Federal Reserve Bank of New York—about a higher usage of credit cards by consumers to make their purchases against a backdrop of rising inflation. Shay said NRF’s survey and research indicates that for the second year in a row, “debit cards are being used more often than credit cards.” He said that 43 percent of holiday shoppers are using their debit cards, while 38 percent are relying on credit cards to pay for holiday gifts.

Shay also spoke about a possible impending railway stoppage, which he said “would be devastating for our economy, for American households and for American working families.” While encouraged by President Joe Biden’s call Monday night for Congress to take immediate action to avert a rail strike, Shay emphasized that “any stoppage in the shipment of goods by rail [would] cost our economy billions of dollars a day. It’s the worst possible time for this to happen.”

And while retailers have most of their inventories in place for the holiday selling season, Shay was quick to note the implications on “other things that move by rail. We think about the chemicals we need to clean water for municipalities, energy, manufacturing inputs….” He also said the concerns are on the broader impact of the economy, things that would impact employment and consumer spending.

Across the pond, data research firm Springboard said footfall on Black Friday was up 9.3 percent from year-ago levels across all U.K. retail destinations, with discounts fueling a 3.2 percent week-on-week gain in foot traffic. The data firm said shopping centers benefited the most with a 16.8 percent week-on-week boost, followed by high streets at up 11.3 percent. Despite the gains, foot traffic was still 14.1 percent below 2019 levels over the week and were down 17.5 percent from 2019’s Black Friday level.

Diane Wehrle, Springboard’s insights director, said footfall remained “significantly lower than pre-pandemic levels, indicating consistent nervousness around spending in the current climate.” The U.K has been particularly hard hit by inflationary pressures. Yet, 2022’s traffic levels suggest that consumers saw Black Friday as an excuse for trips to high streets to enjoy the pre-Christmas festivities, she said.

Inflationary pressures and the impact on the consumer psyche weren’t much better in the U.S., suggesting that retailers will be able to engage customers provided they deliver on both value and price, as NRF’s Shay concluded.

The Conference Board’s Consumer Confidence Index fell in November, after losing ground in October. The Index is now at 100.2, down from 102.2 last month. The Present Situation component fell to 137.4 from 138.7, while the Expectations portion that measure the short-term outlook decreased to 75.4 from 77.9. A reading below 80 for the Expectations Index suggests that the risk of a recession remains elevated.

“Inflation expectations increased to their highest level since July, with both gas and food prices as the main culprits. Intentions to purchase homes, automobiles, and big-ticket appliances all cooled. The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023,” Lynn Franco, The Conference Board’s senior director of economic indicators, said. “Consumers’ expectations regarding the short-term outlook remained gloomy.”

In the November consumer confidence survey, respondents were also more pessimistic about their short-term income prospects. About 17.2 percent said they expect their incomes to rise, down from 19.6 percent last month, while 16.6 percent expect their incomes will decrease, up from 15.2 percent in October.