Holiday shopping remains solid despite inflation

New York

Holiday shopping isn’t what it used to be. But many Americans still expect to spend on Black Friday and into the season.

Mastercard expects Black Friday sales to be up 15% over last year. Spending will be driven by store shopping, which became more modest last year due to a winter Covid-19 surge. Mastercard estimates that in-store sales will grow 18% this year.

“Expect Black Friday shopping across all channels this year,” Steve Sadoff, a senior adviser at Mastercard, said in a news release.

Adobe Analytics expects Black Friday online sales to rise just 1% from last year as shoppers return to stores.

But Adobe said shoppers spent a record $5.29 billion on Thanksgiving Day, up 2.9 percent from a year ago.

The holiday shopping season looks a lot different than ever. Instead of opening their doors with big sales on Black Friday, retailers kick off their holiday sales in early fall. Amazon (AMZN) held its second Prime Day event this October, and Walmart (WMT), Target (TGT) and others also held racing savings events.

Retailers have reduced the appeal of Black Friday by running holiday promotions online.

But shoppers are returning to many of their pre-pandemic routines, and retailers expect the holiday season to be more typical than the past two years of the pandemic. Shoppers are again expected to buy around key holidays like Black Friday and later in the season in hopes of closing deals.

“Shoppers appear to be buying closer to holiday dates,” Dollar Tree (DLTR) Treasurer Jeffrey Davis said on a conference call with analysts this week.

Inflation has squeezed the budgets of many shoppers this year. Consumers are scaling back on discretionary spending such as furniture and electronics and are becoming more picky about their purchases, retailers said.

Low- and middle-income households, especially pressured by inflation, have shifted spending toward groceries and other daily necessities.

“Increasingly, household budgets are being spent on household needs, which is limiting discretionary purchases,” said Christina Hennington, Target’s chief growth officer, earlier this month.

Chain stores are also running on excess inventory in many categories and are offering deeper discounts than last year to clear merchandise and entice shoppers to spend.

Overall, holiday sales are expected to increase this year, but at a slower pace than last year. Many shoppers will rely on savings and credit to buy gifts.

The National Retail Federation expects holiday sales to grow 8% this year.

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