According to a survey conducted by the National Retail Federation, a record number of holiday shoppers – 196.7 million – returned to stores and hunted for bargains from Thanksgiving Day to Cyber Monday.
The trade group did not estimate spending over the weekend but said Tuesday that overall holiday sales are on track to meet expectations. It expects holiday sales to increase by 6% to 8% over last year, to between $942.6 billion and $960.4 billion. Some of the increase will be due to nearly four decades of high inflation.
The holiday season is defined by the National Retail Federation as November 1 through December 31. The sales forecast excludes spending at car dealerships, gas stations, and restaurants. Over the weekend, shoppers spent an average of $325 on holiday-related purchases. This is higher than the previous year’s average of $301.
The weekend’s biggest takeaways, according to NRF CEO Matt Shay, are that Americans are eager to shop in-person again and that they are hungry for big bargains. Over the weekend, more than 122.7 million people visited physical stores, a 17% increase from 2021. Promotions, he says, have become an important motivator as inflation hits Americans’ wallets.
“Consumers are out shopping,” he said on a conference call with reporters, “but they’re out shopping when they see deals and when they get promotions that meet what it is they’re looking for, and so you can get them engaged, but you have to deliver value and price.”
Despite this, retailers have been cautious about their holiday forecasts, particularly as families feel the effects of inflation. Walmart has stated that customers are foregoing discretionary items in favor of cheaper proteins such as hot dogs and peanut butter. Target has reduced its holiday quarter forecast. And, according to Best Buy, customers are more interested in shopping during sales events.
However, according to Adobe Analytics data, online spending reached record highs on key days during the holiday shopping weekend. According to the company, which tracks sales on retailer websites, Black Friday sales increased 2.3% to $9.12 billion, and Cyber Monday sales increased 5.8% to $11.3 billion. According to the NRF survey, consumers are roughly halfway through their holiday shopping. This means that retailers can expect more purchases in the coming weeks, according to Shay.
The National Retail Federation reported on Tuesday that its tally of shoppers over the holiday weekend surpassed last year’s turnout of 179 million during the same period. The group, which started tracking the figure in 2017, predicted a turnout of 166.3 million this year.
A higher turnout and higher spending this holiday season could be due to a number of factors. It may indicate that consumers are willing to purchase, but only if items are heavily discounted. It could also indicate a return to the pre-pandemic holiday shopping schedule, with people concentrating their gift-buying around Black Friday and in the final sprint before Christmas Day.
Or it could herald a more difficult 2023. If Americans fund their shopping sprees by slashing savings rates and carrying large credit card balances or using ‘Buy Now Pay Later,’ they may have less money to spend in the months ahead.
A major trade group, the National Retail Federation, has taken a bullish stance on consumer spending, claiming that a strong job market has encouraged Americans to keep spending. On Tuesday, Shay dismissed concerns about a recession, but he did acknowledge another risk for retailers: the threat of a rail strike. While retailers may have most of their holiday merchandise in stock, he believes a work stoppage could undermine consumer confidence.
“We believe the holiday season would be the worst possible time,” he explained.