Retail Pulse Report: Looking Ahead to Black Friday 2024
A look ahead at Black Friday 2024 weekend, with inflation, GenAI, and record crowds all in the mix.
It is now officially Black Friday week and that means all past indicators of consumer confidence and spending are thrown out the window in favor of predictions. Here’s mine: the weekend ahead will see the record traffic predicted by NRF/Prosper Insights, but without the frenzy of past shopping holidays.
The potential for frenzy is there – consumers who are trading down and looking for deals, consumers who are concerned that things will get way more expensive in January, and retailers who need a great holiday season to stave of concerns about what 2025 holds. But online takes a lot of pressure off stores, and the consumers who will be out will be looking for experiences and family connections just as much as a great buy.
There’s still a lot of other things going on in retail too – let’s dive in!
Retail Economic Indicators
A whole slew of economic indicators came out in the last week, but they were all looking back to October (or earlier), and I’ve seen enough in the last week to suggest that at least US consumers’ behaviors and attitudes took a sharp turn after the election. Consumer confidence, consumer spending – it all seems relatively unrelated to the attitudes and budget they’re bringing into this critical Black Friday week.
So let’s focus on what’s ahead. A lot of companies published findings that Thanksgiving dinner is going to be more expensive – I’ve seen numbers from anywhere between 19-26% more expensive than 2019, depending on your basket of goods. Retailers are responding with meal deal offers that are trying to hit somewhere in the $5-7 per head range, and consumers are saying they will be asking guests to bring something (I actually can’t recall a Thanksgiving dinner anywhere, ever that was not potluck so that finding was kind of weird).
But in a twist that is rapidly becoming standard fare, an NRF/Prosper Insights survey found a record number of US consumers plan to shop in-store and online this coming weekend – 183.4 million vs. 182 million in 2023 (which was its own record). Black Friday is still the most popular day of the weekend, followed by Cyber Monday. 57% of consumers in the survey said the deals are too good to pass up, and a solid block of 28% said the tradition is an important one to maintain. So if consumers are holding back on Thanksgiving, it seems like it’s to save up for BF/CM.
Black Friday/Cyber Monday is no longer a phenomenon limited to the US, though I still often find myself startled when I hear people in other countries talk about shopping Black Friday deals. The German trade association HDE published their take on Germans’ shopping habits for the weekend, and expect spending for the weekend to be flat, a total of EUR 5.9 billion. They noted that in previous years it was growing at double-digit rates year over year, but grew only 6% in 2023 – and now the expectation is flat spending, which is probably a solid indicator of the continued stalling out of the German economy. Consumers there, as everywhere, are looking for bargains.
My prediction: yes, record crowds. Record spending on the weekend, where growth skews a bit towards online over stores, but both do well. But for all that, a more subdued weekend than we’ve seen in past years, without a ton of emphasis on doorbusters and crazed consumer behavior. With so many options for researching online before hitting stores, going out for the weekend is going to be much more about the experience than the frenzy.
Retail Tech & Research Data
Since it’s clear uncertainty will continue to be a theme into 2025, it’s a fair question to ask how retailers and consumer brands plan to navigate it. KPMG asked 120 global leaders in the sector, and published their outlook based on the results. Many leaders cited the past uncertainty and disruption of Covid as the basis of the lessons and action plans they plan to bring into 2025. 82% said they felt confident about their company’s growth prospects, up 5% from last year. But their view on general economic growth fell from 75% optimistic in 2023 to only 59% optimistic in 2024. 58% of respondents said economic uncertainty is top of mind, and 81% expect inflation and cost of living to continue to impact their organizations over the next 3 years. 74% are concerned about changes in trade regulation, and 72% were concerned about the impact of geopolitical conflicts.
Notable: 67% are confident they’ll get ROI from GenAI in the next 5 years. KPMG said “only 67%” and at first that felt like a lot of spin to me, but the truth is, given the amount of money being poured into GenAI across the board, it sure seems like a higher percent should be expecting a return on investment, especially after 5 years. 95% of CEO’s surveyed said they plan to increase staffing levels in the next 3 years, and 82% said they don’t expect GenAI to impact staffing numbers. That one, I’ll go back to “watch what I do, not what I say”. It’s very easy to say “oh no, we won’t lay anyone off” – until you do.
With some irony, I had to include research from GlobalData’s 2024 Omnichannel report, which found that “many retailers can no longer afford to subsidize their online operations with their physical operations.” For some, this statement may seem puzzling – online has been growing like gangbusters, and retailers have been doubling down on their eCom investments over time. This was the whole “online is going to eat stores” argument.
However, it’s one thing to pay for free shipping and returns when costs are low. When fuel, labor, shipping, trucks, and the products that come back unsellable are higher and higher, then sustaining free shipping and returns definitely becomes a question of “is this money going to come from stores?” GlobalData takes it one step beyond that, theorizing that consumers are going to start realizing that they get a better deal shopping in stores than they do online. Return to store is likely to remain free even when online returns may not. Most retailers offer free shipping for save the sale in stores too (not available in store, so ship to home from warehouse or another store) versus an end to free shipping, or higher and higher thresholds to hit it online.
And finally, a Harris poll rounds out this section, which found that consumers say they’re willing to be tolerant with retailers who experiment in general, in stores in particular, and with a completely different set of standards when it comes to AI. 60% of consumers surveyed said they felt more positive about brands that are trying to create new customer experiences about shopping. And 67% say they appreciate brands trying new tech, even when the experiment is unsuccessful.
I’ve seen this before in other contexts. Digital signage, for example, in the early days, consumers would generally feel more positive about a retailer that had digital signs in stores than one that did not – and this was in general, not homing in specifically on digital signage. It seemed like just having the tech created a positive impression, even if consumers weren’t particularly entranced with the tech itself. This seems to hold true today across even more types of tech-enabled customer experiences.
However, the caution here is in one of the last findings reported: consumers’ top two priorities are fair pricing during inflation and product quality. Embracing new tech came in near the bottom. Tech for tech’s sake is never going to win with consumers – it has to save them time, save them money, or deliver value in some other way.
AI & Retail
Back to the AI part of the Harris poll above, 70% of consumers say companies overestimate their interest in AI-driven products and services. 72% believe it’s just a marketing ploy. But it’s here to stay, and retailers investing in it have a big incentive – namely the investment they’ve made so far – in promoting its use.
According to survey conducted by Boston Consulting Group, 38% of consumers surveyed said they have used or plan to use GenAI for holiday shopping. This was a big survey – 40,000 consumers across the US, Australia, Canada, Germany, France, Spain, Switzerland, Poland, and UK. Of those who said they have used GenAI, 80% said it helps them shop smarter, and 40% believe they will use it more while shopping in the future.
Across the way, Bain & Co surveyed 700 consumers and found that the top reason why consumers don’t use GenAI tools while shopping is because they’re pretty happy with their current methods. 7 in 10 consumers said they were not aware of using GenAI even when they recently shopped retailers that were very likely to use it. Consumers cited personalization as the most valuable use case but noted that they wanted a high degree of transparency for whenever AI is being used.
The conclusion is, consumers like what they see when they do use GenAI, but they want to know when they’re using it (and often don’t – something to be careful about), and they want to make sure they’re still getting the best deals and the highest product quality. They want to make sure they’re not paying for gimmicks.
Retail Winners and Losers
Wonder, the ghost kitchen-ish food service company, acquired Grubhub this month. I expected this news to make a bigger splash than it did and felt like this was even bigger strategic news for the company than when they announced that they were partnering with Walmart to host some of their ghost kitchen locations. The CEO of Wonder is Marc Lore, the former CEO of Walmart US eCommerce, and who came to them via their acquisition of Jet.com, which he founded. That’s quite a pedigree. But it can explain the Walmart tie up pretty easily. Grubhub, especially when Walmart is moving more boldly into logistics and last mile deliver, is a different matter altogether.
Dan Berthiaume was clearly wondering the same thing, as he wrote an article digging deeper into what the acquisition might really mean. He noted that Wonder has developed a “sequenced” ordering system that lets customers combine items from as many as 30 different restaurants in a single order. Grubhub could significantly expand on this capability, not to mention already having the scale and reach to cover 4,000 cities today, a significant step up for Wonder. One to watch.
One that everyone already watches, Amazon launched a beta version of a discount store this month, featuring products under $20. Branded “Amazon Haul” it is clearly a response to the rise and adoption of Temu and Shein. “Unbelievable finds, crazy low prices,” with 1-2 week delivery instead of Amazon Prime’s 1-2 days. Any purchase of more than $3 can be returned for free within 15 days of delivery – which is definitely trying to take a shot at the near-unreturnable purchases made on other platforms. And the company will offer discounts for larger baskets, like 5% off any orders over $50.
It's only available on mobile, and it features distinct enough branding to try to distance from the expected Amazon Prime experience. But what’s interesting to me is how this is very blatantly a copycat move. For Amazon, that’s troubling. The company is more typically a bleeding-edge innovator, throwing a whole bunch of things at the wall to see what sticks. The company claims to be extremely customer-focused. But Chinese sellers – with their free shipping and $100+ returns and often questionable quality or provenance – left consumers on Amazon with more of a “buyer beware” mentality, rather than that Amazon was looking out for them. Temu and Shein took what was a negative and turned it into a differentiator. And now Amazon is the one copying competitors, instead of the other way around.
One place where Amazon has been leading – and pushing the envelope on that leadership – has been in retail media networks, and in monetizing the entire surface area of their consumer touchpoints, including Prime Video. Amazon Ads rolled out interactive shoppable ads for Prime Video in North America last week. Shoppers can add items from the ads to their Amazon.com carts. Or they can ask Amazon to notify them via email about products, and they can book appointments with businesses using a QR code. Marketing Brew noted that this makes the service look more like a livestreamer than a streamer, and noted other partnerships in this area, including Roku and Shopify, and Netflix and Google. Netflix is a bit more limited in their partnership – you can use Google Lens to find outfits similar to what the characters are wearing in Emily in Paris. But overall, this is still a pretty radically new behavior for consumers, so adoption is going to be experimental and iffy.
Store Innovations
That iffyness is why the next story is interesting, but also requires a note of caution. Outlandish opened a “store” that combines livestream shopping with in-person physical experiences. The idea is “bringing TikTok shopping to physical retail.” The first store is in Santa Monica, CA. It’s really a bunch of livestreaming kiosks that can also support consumers shopping direct. However, Outlandish isn’t curating anything, except for who it chooses to rent a kiosk to. It’s still a relatively random collection of influencers with some products to hawk. And Outlandish is more platform than retailer, a certified TikTok partner for bringing TikTok Shop experiences to life.
Random people walking in and interacting with random influencers promoting to a live audience online – what could go wrong? That risk aside, we’ve seen the rise and fall of umbrella shopping experiences that didn’t really have any skin in the game other than the space that they were leasing. Neighborhood, and Story, as two examples. I like the idea, I want it to be successful because I think there is a place for an aggregator of popups, basically – an intermediate step between success online and opening your own store outright. But this isn’t it. This is more like an Art Mart or an antique mall that just happens to have a bunch of people in each stall talking all at once. Throw in the dangerous intersection of random people and a live online audience, and you have the potential for chaos. At my most cynical, I’d characterize this as a stunt to draw attention to a tech platform. I’d be happy to be wrong about all of this.
What Did We Learn This Week?
Consumers are feeling pinched by inflation to where they are saying it will impact their Thanksgiving celebrations – and yet, plan to show up in force for Black Friday weekend. Sometimes, literally showing up in stores. I believe, even with record numbers out and about, this will not have the feel of past frenzies. Online siphons off a lot of pressure on stores to cram a month’s worth of spending into a day, but consumers will still be out seeking deals and family connections.
Retailers and brands say they’re still using the lessons learned from Covid when it comes to dealing with uncertainty today, and they cite inflation and cost of living as well as geopolitical conflicts as the things presenting the most risk to their companies in 2025. Retailers also say that online is getting too expensive, and they have to cut back on things they have done in the past to subsidize online spending – like offer free shipping or returns. And just in time, consumers say they want retailers to experiment with new kinds of experiences, but if that experimentation is going to include GenAI, then they want it clearly labeled.
If you’re wondering whether to pay more attention to Wonder or Outlandish, my money is on Wonder. And is Amazon losing sight of the consumer focus that made them what they are today? Copying competitors instead of vice versa is not a good sign.
Bigger picture, we’re still in the middle of a lot of flux. The only thing you can center on to carry you through is the customer experience, whether online, in stores, or all over the place. Consumers may be revising their own opinions about what to expect in 2025, but their spending plans for holiday 2024 are now baked. I’ll have a special edition Pulse Report out Friday or Saturday based on my own wandering during Black Friday, so stay tuned for that!