Retailers are ready to kick off Black Friday just as shoppers pull back on spending.
Black Friday. Retailers are kicking off the unofficial start of the holiday shopping season on Friday with a bevy of discounts and other enticements. But executives are growing concerned with a spending slowdown that could temper sales on the day after Thanksgiving as well as throughout the holidays.
Shoppers, powered by a solid job market and steady wage growth, had demonstrated a resilience that confounded economists and ran counter to sour sentiments expressed in opinion polls. Such spending, while cautious, came despite higher prices in the grocery aisle and higher borrowing costs.
But consumers are now coming under more pressure from dwindling savings, increased credit card debt and still stubborn inflation. In fact, shoppers cut their buying in October, ending six straight months of gains. Shoppers have gotten some relief from easing inflation, but many goods and services like meat and rent are still far higher than they were just three years ago.
The latest quarterly results from a string of retailers from Walmart (WMT) to Best Buy’s (BBY) have reported a weakening consumer. Walmart said it noticed shoppers cutting back in October and offered a muted annual sales outlook. Best Buy, the nation’s largest retailer, said shoppers are trading down to cheaper TVs. And Target (TGT) said shoppers are waiting longer to buy items. For example, instead of buying sweatshirts or denim back in August or September, they held out until the weather turned cold.
“It’s clear that consumers have been remarkably resilient,” Target’s CEO Brian Cornell told analysts last week. “Yet in our research, things like uncertainty, caution and managing a budget are top of mind.”
“We’re taking a measured approach. There’s been some softening,” said Marc Metrick, CEO of Saks Fifth Avenue’s standalone online business, Saks. “I don’t think (the holiday season) is going to be some horrible business nor is it going to be some kind of explosive holiday season.”
Even luxury retailers are noting their shoppers are feeling pinched.
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