Black Friday Sales in Trouble? US Retailers Strike Cautious Tone as Holiday Shopping Outlook Looks Gloomy
By Jace Dela Cruz
Nov 23, 2023 01:02 AM EST
Nov 23, 2023 01:02 AM EST
As the retail landscape prepares for the much-anticipated Black Friday shopping extravaganza, a wave of caution spreads as retailers look skeptical at the holiday season ahead.
According to CNBC, recent forecasts from a myriad of companies, ranging from luxury goods giant Tapestry to bulk retailer BJ's Wholesale Club, paint a subdued picture for the crucial fourth quarter.
Luxury goods titan Tapestry, alongside others like Best Buy and Nordstrom, has adjusted its outlook downward, echoing a cautious sentiment in light of the consumer landscape's uncertain state following inflation.
Hanesbrands, facing diminishing demand for its staple products like T-shirts and socks, attributes the decline to wholesalers keen on inventory control.
Even companies with positive third-quarter performances, such as Dick's Sporting Goods and Abercrombie & Fitch, failed to dazzle with their holiday projections. The common thread among these varied scenarios is an overarching theme of caution.
Target CEO Brian Cornell has shed light on the complex dynamics influencing consumer behavior, stating that while consumers are still spending, various pressures, including higher interest rates, resumption of student loan repayments, increased credit card debt, and reduced savings rates, have left them with less discretionary income.
That, in turn, forces consumers to make trade-offs, impacting overall spending patterns. Cornell emphasized a noticeable trend in the retail industry where dollar sales are driven by higher prices, resulting in consumers purchasing fewer units per trip.
According to CNBC's report, the industry has witnessed a decline in overall unit demand by 2% to 4% in recent quarters, accompanied by seven consecutive quarters of declines in discretionary dollars and units.
Forbes reported a heightened optimism, with 74% of Americans expected to participate in holiday shopping - the highest number since 2017. This surge implies an additional 15.7 million people may join the ranks of holiday shoppers compared to the previous year.
Thanksgiving week encompasses significant shopping days like Thanksgiving Day, Black Friday, and Cyber Monday and constitutes approximately 16.7% of retail sales for the season.
The National Retail Federation (NRF) anticipates that 19% of annual retail sales will unfold between Black Friday and Christmas, signaling a pivotal period for retailers to transition from losses to profits over the long weekend.
"Retailers have been preparing for months for this occasion. They are stocked and ready to help customers find the gifts and other items they want at great prices during the entire holiday season," NRF President and CEO Matthew Shay said in a statement with Forbes.
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