The national ritual of the day after the Thanksgiving sales frenzy will begin soon. It’s called “Black Friday”, although I prefer to call it “Grasshopper Day”.
Regardless, projections for e-commerce and brick-and-mortar retailers are bullish for this holiday season.
The Deloitte Black Friday-Cyber Monday 2022 Survey, which examines what retailers can expect from US shoppers between Thanksgiving and Cyber Monday, estimates that consumers will spend an average of US $500 during this shopping period (online and in-store). mortar shops). 12% compared to last year.
Adobe Analytics predicts that US holiday online sales will reach $209.7 billion in November. 1 to 31 December, representing a year-on-year increase of 2.5%. That might sound like mediocre growth, but considering the economic headwinds, it’s remarkably resilient.
Groceries are expected to hit a record $13.3 billion in online spending this year as consumers plan their holiday meals.
Adobe expects discounts to hit records this holiday season as well, of up to 30% or more. Retailers like Target (NYSE: TGT) are grappling with bloated inventories and massive discounts that are squeezing profit margins.
A research group called Innovating Commerce Serving Communities (ICSC) recently released its research, Thanksgiving Weekend Intentions, which expects consumer spending to reach $125 billion this week over Thanksgiving weekend despite high inflation. and rising interest rates.
The ICSC report also expects 89% of consumers to shop between Thanksgiving and Cyber Monday.
Tom McGee, President and CEO of ICSC, said: “While high inflation and rising rates could impact how consumers spend this holiday weekend, it’s clear that they intend to spend into Black Friday and beyond. The early start of this year’s holiday season hasn’t dampened enthusiasm for traditional milestones like Black Friday and Cyber Monday, and we expect consumers to increase holiday weekend spending compared to last year.” .
As the chart shows, shoppers are starting their shopping this year, with many retailers planning to open for Thanksgiving.
Retailers are experiencing a mixed bag this quarter. Companies that are adept at creating supply chain efficiencies and selling consumer goods at a discount, such as Walmart (NYSE: WMT), are reporting strong operating results and forward-looking guidance. Those stuck in consumer surplus, like Target, do worse.
For the third quarter of 2022, the combined earnings growth rate for the S&P 500 is 2.2%, according to the latest data from research firm FactSet.
To date, 146 of the 204 companies in the Refinitiv Retail/Restaurant Index have reported Q3 2022 earnings, representing 72% of the index. Among companies that have reported quarterly results so far, 69% have reported earnings that beat Wall Street’s expectations, while 1% have provided results directly and 30% have reported earnings below estimates. The industry mixed earnings growth rate for the third quarter currently stands at 2.9%.
These numbers are critical for the US economy and the stock market. About three-quarters of US gross domestic product is consumer spending, and about three-quarters of consumer spending occurs during the holidays.
And of course, the traditional start of the seasonal spending frenzy is Black Friday, which falls on November 25th of this year.
In my usual badass style, I intend to stay indoors on Black Friday and refrain from shopping. However, fortunately for the US economy, millions of American consumers have different ideas.
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