Retail Pulse Report: What Black Friday Means for the Rest of Holiday 2024
Sugar high or protein burn, either way this Black Friday looks to be one for the record books.
Today’s Retail Pulse Report is a special edition: a view into Black Friday results pulling from some public sources, some not-so-public sources, and some on-the-ground reporting by me. It’s research, I tell my family as I drag them from store to store and mall to mall.
Black Friday
I can’t be everywhere so you have to take this perspective with a grain of salt, but I have my sources. Adobe Analytics reports on Black Friday said both Thursday and Friday were up significantly year over year online – 8-9%. But that did not seem to come at the expense of stores. Aptos tracks a basket of retailers that use our POS and/or Sales Audit solutions, and those retailers hit 2023 volumes by around 5:30pm ET on Friday (keeping in mind that West Coast stores were yet only halfway through their day). And then there’s nothing like that first-hand experience. I went to Walmart (in Pueblo, CO), Target (in Denver, CO), and the Park Meadows Mall (Denver).
As I suspected, while there were lines to be found, everyone seemed to be in good spirits and well-behaved. No frenzy, no stampedes. I started at a Walmart in Pueblo, CO (visiting family for Thanksgiving), and the parking lot was not full at all, especially on the grocery side. No, I was not there at 6am! But by 9am, the store did not look like it had been overrun at any point. There were plenty of people shopping, and definitely more traffic inside than I usually see when I’m there.
Walmart was prepared with pallets of special deals, which people seemed interested in – clothing and toys were heavily shopped, while the electronics department was far less busy. Consumers were all over the $5 and $10 deal boxes in apparel and the $48 kids bikes by toys, but the $200-400 TV’s weren’t getting much interest.
At Target, a similar dichotomy unfolded. By the afternoon, toys were hit hard but still had good overall availability – except when it came to Pokémon cards. You could still get the Taylor Swift Poets exclusive, so I’m not sure that worked. And you still had a lot of choices for Wicked toys and kids clothes. And no one seemed to want the really cheap (or really any) TV’s.
At Park Meadows Mall in Lone Tree, CO, you know the mall is over-subscribed if you have to park across the street at the strip mall and take your life in your hands crossing the ring road to get into the mall. Yeah, we did that. I knew everyone was feeling the holiday spirit when people stopped to wave us through instead of trying to run us down!
If there was any winner at the mall, it was Lego. They had their usual line control set up, but it was mostly down to one or two people waiting. However, the bright yellow bags were everywhere in the mall. People looked worn out by the time we got there after lunch – they were just sitting on the floor anywhere they could find a spot – while even more people streamed through the aisles. Some retailers were clear winners – Lululemon was packed to the gills but curiously, Vuori was not. Coach, also packed, but Michael Kors was not. Macy’s – full. JCPenney was not. It felt like shoppers were either very focused in their needs and wants, or they were splitting the extremes – looking for great cheap deals, but also where they felt they wanted the luxury item, they were going all out.
I saw it with the TV’s too – the low-end TV’s were untouched. I saw people wheeling big screen TV’s out of Target and Walmart both, but in both cases they were not the $200 deals that in previous years would’ve seen a crush of doorbuster shoppers to snap up before they’re gone.
However, I would temper this relative lack of interest against deeper cuts on offer in other stores. Several clothing retailers opened Black Friday with “buy one, get one 50% off” or up to as high as 40% off everything in the store. Clothing retailers have a longer supply chain, so a lot of what’s on the shelf reflects pre-disinflationary costs that they had to commit several months ago. Adobe Analytics mentioned deeper discounts this year vs. last year too. I don’t think that’s desperation, so much as retailers having the room in a disinflationary market to go big on their discounts early. At least out of the gate from Thanksgiving, retailers aren’t discounting because they need to, but because they can.
What does it mean for the holiday season overall? I stand by my revised, post-election opinion: this holiday season will be good in the US. Really good – better than expected good. Depending on your politics, you’re buying because you think the winner is going to be good for the economy, or you’re buying because you fear tariffs are about to make everything way more expensive. Either way, you’re buying, and at rates that the forecasts from fall didn’t take into account.
But it will be spread unevenly. As we saw in the difference between Walmart’s third quarter results vs. Target’s, sometimes when a company doesn’t do well, it’s not an industry problem, it’s a company problem. We’ll have to sort out which retailers had the right combination of goods and offers to attract holiday shoppers, vs. those that did not. There will be both kinds of retailer – don’t make the mistake of attributing poor results to an industry issue (no matter how much the CEO and CFO insist it’s the weather or some other external factor).
While Black Friday was the biggest thing that happened last week, it wasn’t the only thing. Let’s dive into the rest!
Retail Economic Indicators
UK consumer confidence didn’t move much from October, according to the BRC-Opinium Consumer Sentiment Monitor, and didn’t provide a lot of clear direction on their state of mind going into the holidays. Consumer expectations about their personal financial situation knocked up one point in November from -4 to -3. Their expectations for the state of the economy fell 2 points from October to -19. Personal spending on retail rose from +2 in October to +3.
US consumer confidence, according to the Conference Board’s Consumer Confidence Index, ticked up a bit more definitively in November. Their survey timeline was mostly post-election. Overall consumer confidence was up 2.1 points to 111.7 in November. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased 4.8 points to 140.9. Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years.
A Retail Council of Canada survey found that even with a shorter holiday season, Canadian holiday spending is expected to rise 8.8% to an average of C$972. About ¼ of respondents reported they were delaying their purchases until Black Friday or later.
While it may not feel like it right now, there is more to look forward to than just the 2024 holiday season. Goldman Sachs predicts the US economy will grow 2.5% in 2025 vs. consensus estimates of 1.9%. They see tariffs causing a one-time impact, and really translating only to a 0.1% increase in inflation for every 1% of tariff. I’m not sure I buy that – all our past lessons about tariffs happened at a time when most of what we were importing were inputs into production, not finished goods. For most consumer products, what we’re importing today is finished goods, which means that tariff goes right on top of the full cost of the item, less only transportation and inventory holding costs. It’s a bit of an open debate whether we see the real impacts of widespread tariffs from a policy perspective. Let’s hope we don’t see that impact from a retail price perspective.
Goldman Sachs is also predicting that any disruption from immigration policies will basically mitigate the impact of a tightening labor market. This, of course, assumes that the people laid off by the white collar industries currently laying off people – like big tech and finance – are going to be happy finding jobs in the more blue collar industries most likely to be impacted by deportation policies, like construction and agriculture. They see tax cuts boosting consumer spending , but they had no comment on how plans to dismantle the safety net might net out for the majority of consumers.
Finally, social commerce is predicted to reach $1T globally by 2028 – building up from a forecast of $688B in 2024, according to Statista/Stocklytics.com. Social commerce’s share of eCommerce is expected to grow too, from 5% of global online sales in 2018 to 17% in 2024 to 20% in 2028. China is the largest driver of both the total and the growth, expected to be 2/3 of the total in 2028.
Retail Winners and Losers
The parade of announcements about innovations available in time for Holiday 2024 continues. Walmart had more to announce, including a shoppable live sports partnership with NBCUniversal for their Thanksgiving NFL broadcast. I wasn’t able to see it (and even if I was able to, I might have napped through it, post-turkey!), but I was very interested in the idea. It’s more integration with Walmart’s Connect retail media platform, which will also bring more in-depth metrics and reporting for advertisers. It relies on an on-screen QR code, which is not that exciting, but also brings in NBCU’s text-to-shop capability.
American Eagle got in on the game (see what I did there?) by piloting an AI-generated, personalized gift-giving experience available on WhatsApp. For the consumer, it feels like a one-on-one conversation with an “AI consultant”, who will ask a series of questions about budget, gift recipient preferences, etc. Consumers can make a purchase from American Eagle directly from within the app. The company focused on WhatsApp to appeal to a younger crowd.
And finally, not a holiday experience but one targeted towards HQ employees, Chanel is partnering with La Vitre, a “human-size connected screen” provider. I spent some consulting years in the tech for product design in retail, so I confess to being fascinated by solutions that try to reduce the time it takes to drive to a successful new product, without disrupting the feedback loop and creative tension between vision, cost, physical realities, and the very real, very large distances often found between design and supply. La Vitre provides a human-sized screen that can interact with mobile phones for zooming in and to help with product design collaboration. It sounded like the early days of Cisco Telepresence - fools you into thinking you're there, which makes for better collaboration, and better results.
What Did We Learn This Week?
Shoppers came out in force for Black Friday. Of course, several questions remain – was it a one-time deal, or the kickoff to a bigger holiday season than expected? (You may have noticed I favor the latter.) Did retailers make bank or did they give away the farm with deeper discounts? (Even though Black Friday was later this year, I still think it was the former – planned discounts.) And finally, will any rising tide lift all boats? Here, I think the answer is no. We’ve seen consumers split away from the middle in the past – they did so strongly coming out of the financial crisis of 2007-08. I think we’ll see that again. Retailers who offer low-priced bargains, and/or offer distinct value in desirable luxury, will win. Anyone stuck in the middle will lose.
Looking ahead, I still have reservations about what’s on deck for 2025. Typically, if holiday spending is strong, retailers will go into the new year with a long shopping list of tech investments. However, this holiday’s results may be skewed by consumers anticipating either really great or really challenging economics in 2025. If Holiday 2024 turns out to be a sugar high, or if retailers fear that is the case, 2025 budgets will still be cautious. But if Holiday 2024 is a blowout, it’ll be hard to ignore – and sometimes retailers know they have to spend the money when they have it, no matter what the economy looks like ahead. Certainly tech in stores is way overdue for a refresh (and with more end of life moments coming).
In the meantime, sleep off that turkey, and brace yourself for “cyber week” coming hard on the heels of the Black Friday store bonanza!
Note: All photos taken by me!