As November draws to a close, the U.S. holiday shopping season officially kicks off with Black Friday, the most anticipated shopping day of the year. Retailers are bracing for a shift in consumer behavior as shoppers, still feeling the effects of inflation, become more price-conscious and strategic in their approach to securing the best deals. In 2024, consumers are not just hunting for bargains—they’re laser-focused on maximizing the value of every dollar spent.
Price Sensitivity Drives Consumer Behavior
Despite inflation stabilizing after the steep price hikes experienced during the COVID-19 pandemic, financial strain remains a significant concern for many shoppers. As a result, bargain-hunting strategies have evolved, with shoppers taking a more calculated approach to how they spend during this key shopping period.
Vivek Pandya, lead insights analyst at Adobe Digital Insights, told AFP that holiday shoppers this year are “even more preoccupied and very focused around value and discounts” compared to previous years. “We do see stronger price sensitivity on the part of the consumer, and they are very responsive to deals and event-tie deals,” Pandya explained.
This heightened focus on value and price sensitivity is influencing shopping behaviors, as consumers wait for the best discounts, participate in early sales, and carefully consider their purchases. Discount events such as Amazon’s Prime Day and Memorial Day sales have already seen strong participation, setting the stage for what is expected to be a competitive and discount-driven holiday season.
Retailers Adjust to Inflation-Driven Shifts in Consumer Behavior
In response to ongoing inflationary pressures, major retailers have adjusted their promotional calendars to accommodate consumers’ changing expectations. Some retailers, including Target, have begun offering Black Friday promotions as early as October. This move helps spread out consumer spending and gives shoppers more opportunities to take advantage of sales before the busiest shopping days.
Target has also popularized its “Circle Week” savings events, held quarterly, which have seen shoppers focus their purchasing power around specific sales periods. These events have driven fluctuations in purchasing behavior, with consumers choosing to delay purchases until a sale is imminent.
Brian Cornell, CEO of Target, shared with analysts that consumers are “becoming increasingly resourceful in their shopping behaviors, waiting to buy until (the) last moment of need, focusing on deals, and then stocking up when they find them.” This trend reflects the ongoing concern about inflation, which has stretched many household budgets.
Retail Forecasts and Spending Trends
Despite the challenges posed by inflation, there is optimism in the retail sector. The National Retail Federation (NRF) forecasts holiday spending in 2024 to grow by 2.5 to 3.5 percent year-over-year, reaching up to $989 billion. This growth is partly attributed to easing gasoline prices and the stabilization of certain food costs, factors that are expected to provide some relief to consumers.
Economists suggest that the overall inflationary environment has weighed most heavily on lower-income households, where financial stress has been most acutely felt. A rise in charge-off rates, as reported by banks, signals growing challenges for this demographic. However, some retailers are seeing positive trends. For example, off-price apparel retailer Burlington Stores has reported strong sales in low-income zip codes, a sign that real incomes for this group are beginning to edge up.
“Maybe for the first time since 2021, it looks like their real incomes are finally edging up,” said Michael O’Sullivan, CEO of Burlington Stores, during a conference call. This improvement could drive stronger demand for discounted products in the coming weeks.
Shortened Holiday Season and Early Sales Events
This year’s holiday season is shorter than usual due to the late timing of Thanksgiving. With Thanksgiving landing on its latest possible date—November 28, 2024—retailers are adjusting their strategies to make the most of the shorter shopping period. The condensed holiday schedule has prompted some retailers to kick off their Black Friday sales well before the official date.
Electronics giant Best Buy, for instance, started its Black Friday sale early and reintroduced its popular “Doorbuster” sales, available both in-store and online. This move comes after several years of discontinuing such events due to safety concerns and the risks associated with crowded lines.
As the holiday season progresses, Adobe Digital Insights reports that online sales are already showing strong growth. In the first 24 days of the season, online sales increased by 9.6 percent year-over-year, surpassing the projected growth of 8.4 percent. This shift toward online shopping continues to accelerate, as more consumers seek convenience and the ability to compare deals from the comfort of their homes.
Inflation Continues to Impact Lower-Income Households
The inflationary environment has particularly impacted lower-income consumers, who are facing the dual challenge of rising costs and stagnating wages. Financial stress is evident in the rising charge-off rates reported by banks, indicating that many households are struggling to keep up with bills and other expenses.
However, some retailers are seeing growth among budget-conscious shoppers. Burlington Stores, for example, reported that many of its strongest sales have come from low-income areas, a trend that may indicate improving purchasing power for these consumers. Michael O’Sullivan, CEO of Burlington Stores, stated that “real incomes are finally edging up,” suggesting that some financial relief may be on the horizon for struggling households.
Conclusion
As Black Friday kicks off the holiday shopping season, retailers are preparing for a more cautious and value-conscious consumer. Shoppers are prioritizing discounts and strategically waiting for the best deals, while retailers are adjusting their promotional strategies to accommodate the shift in spending behavior. While inflation continues to be a concern, there is optimism in the retail sector, with some positive trends emerging, particularly among low-income consumers. As the holiday season progresses, online sales are expected to continue to thrive, further reshaping the retail landscape.
For the latest Business and Finance News, subscribe to Globalfinserve, Click here.
#NYSE #USMARKETS #DOW #SP500 #NASDAQ #Economy #Finance #Business #Global #Earnings #CEO #CFO #Analysis #AI #Tech