The spending data on the GDP and PCE reports end in September. They have nothing to say about Black Friday or holiday spending in November and December. As mentioned last week, reports about Black Friday spending are very noisy coming from different sources over different periods, etc. But here’s what we have.
Let’s start with online sales only.
1. According to Adobe Analytics:
· On Thanksgiving, shoppers spent $5.3 billion, 3% more than last year.
· On Black Friday, consumers spent a record $9.12 billion shopping online, up 2.3% from last year.
· On Cyber Monday consumers spent $11.3 billion or 5.8% more than last year.
· For Cyber Week, Thanksgiving through Cyber Monday, sales reached $35.27 billion, 4% from last year.
2. More online data from Salesforce, which includes commerce, marketing, and services showed:
· Cyber Week sales of $68 billion, up 9% from last year.
· Globally, Cyber Week sales reached $281 billion, up only 2% from last year.
3. The National Retail Federation said that over Cyber Week, 130.2 million shopped online, a rise of 2% over 2021.
4. Shopify, an e-commerce platform for many direct-to-consumer start-ups, reported sales of $3.4 billion on Black Friday, a 21% over last year.
5. MasterCard SpendingPulse reported e-commerce sales increased 14% over last year.
Got all that? 2% to 21% and everywhere in between. And that’s online sales which are only about 15% of all retail sales.
Now let’s look at brick-and-mortar stores. There is less data available here since presumably, it’s more difficult to get than online digital data.
1. According to the National Retail Federation (NRF), 122.7 million U.S. consumers shopped in physical stores over Cyber Week, a 17% increase from last year.
2. On the other hand, Sensormatic Solutions reported only a 2.9% in-store traffic increase.
3. And MasterCard SpendingPulse reported that in-store sales on Friday were up 12% from last year.
Take your pick.
And from an article in Modern Retail we get some remarkable comments:
· Melissa Burdick, co-founder and president of the e-commerce software platform Pacvue said that many people waited until Black Friday to shop in anticipation of great deals. Sometimes this looked like “cart squatting,” or loading items into an online shopping cart and then waiting to order until a fresh deal kicks in. “One winner this year was discounts,” she said. “If you don’t have a discount, people just aren’t buying.”
· She also said “There’s also a shift toward people purchasing items that may be more practical and essential. For example, the top-clicked Black Friday deal on Amazon last year was a $200 laptop. This year, it was a $6 pair of leggings. “They’re buying needs not wants, and they’re waiting to buy needs on sale”.
· Since 59% of shoppers on Cyber Monday used mobile devices, “Burdick from Pacvue said this trend suggests retailers ensure mobile pages are optimized and ready for viewing. That includes making sure promotions can be found easily and are displayed on mobile pages, as well as making sure manufacturers of products have included a variety of images and videos to go with the listings. The administrative part of that is making sure images are mobile-optimized, that you can see it and pinch it.”
That last bullet just showed me how retailing is changing so rapidly and how difficult it must be to keep up.
OK, that’s the numbers salad about holiday sales, and it looks like a salad that got spilled all over the floor. The takeaway for me is that most of those growth numbers after inflation are negative. Real consumption after inflation, which makes up 70% of all economic activity is slowing. People are seriously bargain shopping. In addition, consumers are now using more personal financing to make holiday purchases. Buy now, pay later (BNPL) orders jumped 78% the week of November 19 compared with the previous week, with revenues rising 81% over the same period. And according to Lending Club, 37% of Americans plan to use financing such as personal loans, credit cards, and BNPL this holiday season, up from 34% in 2021. Consumers’ buying power is getting eroded away. And that factoid about the laptop vs. the leggings may be the most important piece of information out of all of those reports. It feels shaky.
So let’s summarize. The labor market is slowing, housing is collapsing, consumers are worried about the future, manufacturing is hovering around neutral, and the Fed is going to keep raising rates, inverting the yield curve, and strangling the economy. And holiday sales feel shaky.
I think it’s consumers’ last hurrah going into 2023.
I know, I’m gloomy, but I don’t make this stuff up, and I think you should know about it. And let’s think about it this way. It’s a recession. Recessions come along every 10 years or so. It’s part of the business cycle. I’ve lived through several of them. And we will get through this one too, it will just feel bad in the process, like in this note.