Why Black Friday sales didn’t soar this year.
Leading up to Black Friday and Cyber Monday, all signs were pointing to big retail numbers on America’s biggest shopping days.
Jobless claims hit their lowest level since 1969. Consumer spending and income both rose in October. Vaccination and booster rates were on the rise and helped encourage shoppers to go back into stores.
Yet, Black Friday sales didn’t soar over pandemic levels as expected. They actually decreased slightly.
This news isn’t as bleak as it seems.
First, concerns over supply chain issues and shipping delays encouraged consumers to shop early. This, in addition to the trend among retailers to start their holiday promotions earlier and earlier each year resulted in sales that otherwise would have occurred on Black Friday or Cyber Monday actually taking place weeks in advance.
We also saw an increase in in-store Black Friday shopping this year. While traffic levels were below pre-pandemic levels, many buyers are still planning on doing their holiday shopping in person. After having been cooped up at home for the better part of two years, people are more willing to face the malls. It isn’t clear if this phenomenon is a one-year blip or something more, but this is encouraging for retailers, to say the least.
So, despite the underwhelming performance of Black Friday and Cyber Monday, total holiday sales are expected to climb at record levels this year. The National Retail Federation predicts an increase of up to 10.5% — putting November and December sales at $843.4 billion and $859 billion, respectively.
It is important to note that these increases are fueled, in part, by rising prices. Between November 23–25, the average selling price in the US was up 22% compared to the same period last year, according to SalesForce. As such, the average order value was up 11% from 2020, despite the fact that 3% fewer items were purchased.
Of course, the retail industry is still facing pandemic-related challenges — including supply chain and labor challenges — and that isn’t even factoring in the impact that the Omicron variant may have. But, for now, I remain hopeful that these will be happy holidays for online and brick-and-mortar stores.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.
