Demand and price increases slow Black Friday sales
As more Americans shopped on one of the busiest days demand of the year, Black Friday Deals were among the least generous in recent memory. Apparently, there is the “lowest level of clearance goods in five years or more,” as noted by Oliver Chen, an analyst at Cowen & Co., in a report published on Friday. Salesforce.com, Inc. reports that over the past few days, consumers around the world saw an average discount of 24% on products, down by about 2% – 4% from the norm in recent years. An interview with Rob Garf, vice president of retail at Salesforce.com, revealed that he believes customers should “feel really good” if they see a 25% discount. To kick off the holiday season, 2018 has “some of the lowest average discount rates that we’ve seen in recent history.” You can attribute this to the confluence of factors, including high demand, increasing prices, and lower supplies as a result of the global supply-chain bottleneck. Retailers like Macy’s Inc., American Eagle Outfitters Inc., and Kohl’s Corp. are offering steep discounts on certain items, but the overall level of markdowns should allow them to strengthen their merchandise margins, according to Chen. Despite the anguish of coupon clippers, consumers are still willing to spend.
A retail metrics expert, Ken Perkins, told Bloomberg TV that full-price sales are likely to increase dramatically. “Buyers have shown an unexpected tolerance for price hikes.”
“Isn’t this supposed to be 50% off?” they asked her.
Due to the lack of truly amazing deals, attendance was low at some establishments. Meliesha Francis, 37, reported that Black Friday traffic at a Target in the New York suburbs was about half of what it used to be before the coronavirus pandemic. They weren’t having a sale on necessities like Huggies diapers, so she came in search of those. Earlier that morning, a trip to the Bed Bath & Beyond in the same shopping centre had also yielded no results.
There was only one available pair of curtains,” Francis said.
That’s intended in some measure. Large retailers like Target Corp. and Walmart Inc. started advertising their Black Friday Deals weeks in advance, allowing them to meet customer demand over a wider time frame. In their quarterly earnings reports from last week, both companies showed robust revenue growth and issued optimistic forecasts for the upcoming holiday season.
“While historically we thought of Thanksgiving weekend and Black Friday Deals as the kickoff to the holiday season, in many ways it’s now halftime,” said Matt Shay, chief executive officer of the National Retail Federation.
According to the Adobe Digital Economy Index, $5.1 billion was the low end of projections for online spending on Thursday, the United States’ Thanksgiving Day. Earlier this week, Adobe estimated a range of $5.1–$5.9 billion. However, the company reaffirmed its forecast that online spending would increase by 10% to a record $207 billion between November 1 and December 31.
Although detailed foot-traffic data are not yet available for physical establishments on Friday, it is possible that overall sales will still be higher as a result of online orders or shopping that extends into the evening. Because there are no doorbuster deals, customers don’t actually need to be there as early as they normally would.
According to Simeon Siegel, a retail analyst at BMO Capital Markets, “the mayhem that characterised previous Black Fridays might really be troublesome given the inventory scarcity.” The unfortunate truth is that businesses do not have enough units to handle the volume expected in 2019.
The lack of deals has been called “an urban myth,” according to Craig Johnson, president of Customer Growth Partners, who stated that numerous stores are currently providing discounts of between 40 and 50 percent.