The “official” start to the holiday shopping season was a mixed bag for a retail sector beset by supply chain bottlenecks, out-of-stocks and changing consumer behavior.
Heading into Black Friday
For the most part, shoppers were out in force at the malls on Black Friday, and online sales climbed. But retailers also put the word out on the necessity for early holiday shopping, both by discounts in-stores and online that began in October, due to possible shortages. Leading into the long weekend, retailers appeared to have been mostly prepared for the start of the season.
“I have definitely seen some big retailers’ shelves fully stocked. Gaps have indicated some challenges, so fulfilling orders could be on a delayed basis,” Travis Epp, partner at the accounting firm EisnerAmper and group leader of the manufacturing and distribution group, said, adding that companies have been “managing the shortages differently.”
“There is no guarantee consumers will get what they want. Ordering earlier will be helpful, but still no guarantee,” he said. The cost of goods has changed dramatically on the manufacturing front over the past year, and firms have been working different pricing models to adapt their pricing to get their required margins, he added.
While it wasn’t immediately clear how much of the pricing this weekend was elevated due to pass alongs to the consumer, one thing evident to those touring the malls was a much lower level of discounting this year. That could be because some retailers elected to offer fewer discounts so they wouldn’t have to raise prices.
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Store visits, meanwhile, yielded mixed results.
While TJX CEO Eric Herrman said earlier in November that the off-price retailer was “surgically adjusting” prices across categories, Black Friday shoppers didn’t seem deterred at a T.J. Maxx/HomeGoods store in Stafford, N.J., where all nine cashiers were servicing approximately 30 queued shoppers.
Perhaps illustrating consumers’ desire to score a deal and the nameplates’ relative lack of a robust e-commerce presence, the off-mall, off-price store appeared to be the most heavily trafficked location in the area. Many products were selling for 40 percent to 50 percent off, with some discounted as much as 70 percent.
Whether it was men’s or women’s clothing, shoes, dresses, handbags, throws and pillows, the store didn’t seem to suffer from the out-of-stocks plaguing other retail locations, with nary an empty shelf seen throughout the store Friday afternoon.
While supply chain constraints have affected inventory levels across retail, they have also prompted many major footwear brands to better control their wholesale pipeline. Perhaps no bigger pricing example of this came then at Famous Footwear, which advertised discounts of up to 40 percent off on boots and booties, as well as a BOGO (buy one, get one half off) promotion. This year, top-name brands such as Nike, Under Armour, Birkenstock, Crocs were not included in the BOGO promotion.
Overall, the Stafford, N.J. location appeared well stocked, though the clearance aisles seemed picked over. But there less than 10 shoppers in the lightly trafficked store.
Stockouts were more prevalent at nearby Kohl’s and Walmart stores on Black Friday. Although the Kohl’s location appeared to be well-stocked overall, there were areas showcasing the department store’s Tek Gear activewear brand, Apt. 9 men’s brand and So women’s shoes, all with barren shelves.
Kohl’s was fully stocked in sleepwear and the most-promoted private apparel brands in the store, including Sonoma and Lauren Conrad. And while denim is once again a hot-seller, the retailer didn’t seem to have a problem keeping its Levi’s, Lee and Dockers sections largely in stock.
Walmart also emphasized its private apparel brands upon entry, dedicating significant floor space to its George, Time and Tru, Terra & Sky and Wonder Nation labels. In line with current trends, casual apparel and activewear seemed to command the most floor space. Unlike Kohl’s, denim at Walmart was clearly in short supply. On top of that, substantial areas for both men’s shoes and women’s boots (as seen below) were largely empty.
The most consistently stocked (and most heavily trafficked) store beyond the TJ Maxx/HomeGoods location was Target, which pointedly promoted its private apparel brands including the $1 billion activewear label All in Motion as well as children’s label Cat & Jack. Outerwear, sweaters and jeans from the kids’ wear brand were marked down 30 percent markdowns while the active label touted deals up to 50 percent on some fleece pullovers and pants.
Across the retailers surveyed, Target, Kohl’s and Bed Bath Beyond had areas designated for BOPIS and curbside pickup, with the latter prominently advertising in-store pickup in a window display. But these areas didn’t appear to be heavily used, with only one customer parking in a Target “Drive Up” spot. The retailer had eight spots dedicated to same-day pickup, while Kohl’s and Bed Bath & Beyond had four. However, Adobe says curbside pickup is growing in usage. So far this month, curbside pickup is up 70 percent from two years ago. On Black Friday, curbside fulfilled 20 percent of online orders among retailers offering the service, slightly below in previous days.
Saturday and Sunday traffic
“People were going out and shopping this weekend. That’s great news for retailers. A lot of the malls were busy,” Stephanie Celgielski, vice president, research and public relations at the International Council of Shopping Centers, said on Saturday. “Health and safety are no longer the top consideration for going out and shopping—it’s been about what promotions are being run.”
Discounts seem to be top of mind for inflation-wary shoppers. “I heard some consumers say they didn’t see the same level of discounts as in years past, whether that’s because of their expectations or because the discounts weren’t really there,” said Celgielski, who isn’t sure foot traffic surpassed 2019 levels.
In fact, Black Friday foot traffic came in 28.3 percent below two years ago, according to Sensormatic Solutions, a Johnson Controls company and shopper traffic analytics firm. Data also indicates that consumers are prioritizing in-store shopping and options like BOPIS and curbside to avoid potential shipping delays, it added.
Gabriella Santaniello, a former retail analyst and founder and CEO of retail consulting firm A Line Partners, is also skeptical about whether traffic matched or beat two-year-ago levels.
Shoppers at Old Navy and The Children’s Place drove strong purchases of matching pajama sets. At Victoria’s Secret, Christmas pajamas were also in stock, but basic bras were missing and there was low stock in panties. And at Anthropologie, many items were selling out quickly both in stores and even for items left in the online cart, which sold out a few hours later when shoppers went back to complete their purchases, Santaniello said.
“The easy-to-grab stuff, the gift items ordered specifically for holiday, those items were planned ahead of time. When we talk to retailers, we found that they really hustled to get those seasonal items in,” she said. “Even secondary items, such as candles to fill out the assortment, were selling out.”
Novelty fashion like party dresses and cute tops at Aerie and American Eagle Outfitters, and even small “feel good” luxury items factored among consumers’ top choices, Santaniello said. “Denim’s hot, but many already have that in their wardrobes. And if you buy a bottom, you usually need to add a top,” and a cute top works well as a gift, she said, citing smocked, puff-sleeve peplum styles. She expects Cyber Monday discounts will be on par with Black Friday promotions.
Kearney’s Brian Ehrig saw “decent traffic” over the weekend, though the apparel and retail operations expert believes “shopping was more a normal pre-pandemic weekend than the usual Black Fridays of the past.”
“That might have been because shoppers already did some of their shopping online,” said Ehrig, a partner at the management consulting firm, after visiting Nashville-area stores.
Some clothing stores were “really broken inside,” or lacking in the breadth of sizes expected for a big shopping weekend, he said. One specialty store jacket modeled in a window-front mannequin was out of stock in anything beyond sizes 2, 4 and 12, he added.
A footwear retailer had only the display size in stock for a “very common item,” Ehrig pointed out. “I don’t really see how that’s possible. This shoe is an iconic style that should be on a replenishment program and should never be out-of-stock. It’s always available, but not this weekend.”
What’s more, many online Black Friday deals sold out, whether it was the color Ehrig preferred for a kitchen gadget or a size he wanted for a premium jean discounted at 25 percent off. Given the out-of-stocks, Ehrig is feeling “skeptical” about some of the advertised promotions. However, some consumers might jump at whatever’s available and avoid the hassle of scouring empty store racks.
Adverse weather seemed to chill shopping turnout in some parts of the country. “The weather clearly had an impact on shopping in Texas Saturday. In a dreary and cold rain, traffic, in general, was less than you would have expected for the holiday weekend. Big-box retailers like Walmart and Target did seem to have more traffic than smaller box and specialty retailers,” said David Ritter, managing director in the consumer and retail group at Alvarez & Marsal.
“Sunday morning was a different story with traffic up across the board,” he added. “It appeared heavily impacted by weather, but Sunday had a different vibe and excitement level across the board—customers generally seemed excited to shop across retail formats.”
Ritter echoed his peers’ insights on what seemed to be muted promotions. “The level was very likely impacted by expected supply chain and inventory positions and the ability to keep deep discounts in-stock,” he said, adding that big names like Walmart and Target still offered some “eye-catching” electronics deals. “But smaller specialty formats, especially apparel, felt much less promotionally intensive than in past years.”
The shoppers he spoke with seemed to operate with a “sense of frugality,” focusing on essential gifts while “treasure hunting for themselves” along the way.
While inventory was better than expected for many categories, Ritter said apparel was in worse relative shape thanks to “significant out-of-stocks in select stores.” Many store staff “indicated that all product had been pushed to the floor in a ‘get it, while we have it’ approach that could hint at impending issues later in the holiday season,” he said of his brick-and-mortar visits.
Key data
Some parts of the country had the driest holiday weekend since 2017, according to Planalytics. Frigid temperatures in the Eastern U.S. drove demand for sweaters, outerwear, fleece, gloves and hats, and blankets, while dry weather out West spurred sales in electronics, toys and home goods.
Data from Customer Growth Partners (CGP) on Sunday indicated that Black Friday’s sales totaled $34.9 billion, partly the result of many stores closing on Thanksgiving Day and the declining online penetration of total sales. CGP believes that Black Friday sales rose 12 percent, above the prior record of $31.4 billion set in pre-pandemic 2019.
“Much of the retail growth we’ve see comes from shopping deferred from Thanksgiving itself or demand pulled forward from Saturday—which looked a lot like a typical early November Saturday,” CGP president Craig Johnson said on Sunday.
He noted that the Black Friday strength was so robust—particularly for apparel and department stores, each coming off years of soft results even pre-Covid—that “some demand is even being pulled forward from December, resulting in the dreaded early-December lull.”
With inflation on the rise, gasoline prices 60 percent above last year and supply chain challenges, CGP is expecting a below-consensus forecast of 6.7 percent growth for the holiday season. That’s in contrast to the National Retail Federation’s 8.5 percent and 10.5 percent growth forecast versus last year, or between $843.4 billion to $859 billion from 2020’s $777.3 billion. NRF also expects a $218.3 billion to $226.2 billion haul for online and other non-store sales, representing growth of 11 percent to 15 percent.
Total online spending on Black Friday was $8.9 billion, which is at the low end of Adobe’s predicted range and slightly below the $9 billion in 2020. Sales on Thanksgiving Day were flat year-over-year at $5.1 billion, representing the first time where both days did not garner an increase in online spending year-over-year, Adobe said Saturday, another sign consumers started spending earlier in the season.
Adobe expects Small Business Saturday’s haul will come in around $4.5 billion to $5.1 billion. And for Cyber Monday, which is forecast as 2021’s biggest online shopping day, consumers are expected to spend between $10.2 billion and $11.3 billion.
From Nov. 1 to Dec. 26, Adobe data indicates that consumers have spent $89.9 billion and are on track to hit Adobe’s forecast of $207 billion.
Consumers seem to be turning to flexible options to fund their holiday spending sprees. Adobe said shoppers are using buy now pay later services “substantially” more than in 2019, with purchase via installment payments up 422 percent and order volume 438 percent higher.
What’s more, smartphones continue to fuel Black Friday shopping, Adobe said. Roughly 44 percent of Friday’s digital sales were made using a smartphone, a 10.6 percent increase from 2020. Smartphone traffic surged 62.2 percent, or 2.2 percent above last year, but Adobe says this data illustrates that desktop is still the device of choice when it comes to pulling the trigger on a purchase.
Shopify reported a “record-setting” Black Friday, with its independent and direct-to-consumer merchants driving $2.9 billion in sales. Apparel and accessories were the platform’s most popular categories, with health and beauty following and home and garden rounding out the top three.
Additional reporting by Jessica Binns.