Anxious to unload inventory and eager to get a jump on the season, a few retailers this year held red-letter holiday sales before Halloween. There was some logic to starting early, because, with inflation squeezing their budgets and federal pandemic support funds depleted, many consumers have to stretch their budgets this year.
Other retailers were more patient, though. Overall discounting was actually down in those early weeks before Black Friday compared to last year. For Black Friday itself, the National Retail Federation reported robust turnout, though Placer.ai tracked lighter footfall at malls and physical stores.
Some people seem to be in less of a hurry to tend to their lists, possibly because there’s more weekend time before major holidays this year, according to Nordstrom CEO Erik Nordstrom, speaking this week at Morgan Stanley's Consumer & Retail Conference. Christmas Day falls on a Sunday, and Hanukkah doesn’t end until the day after that.
“There is a sense of customers holding back, and some of that is the way the calendar falls this year,” Nordstrom said. “It’s an extra Saturday before Christmas, Hanukkah is later. There's some calendar reasons for holiday to to be pushed back a bit. But I do think there's something in the environment, a promotional environment where customers are pulling back. We've seen some signs of that.”
The department store is seeing “signs of strain on the customer across all customer cohorts,” especially in lower-income households, he said. “Now, we still see customers responding to newness and responding to higher-ticket items, so it's not a price thing. ... For us, it's not at all about lower prices doing well and higher priced items not doing well. If anything it's the opposite.”
Macy’s Chief Financial Officer Adrian Mitchell similarly sees a pullback so far this year, for a number of reasons. Foremost among them is “the pressure on the consumer given the inflationary environment, but also their capacity to spend on discretionary items, which is the category that we're operating in,” he told the Morgan Stanley audience the following day. In late October into November, unseasonably warm weather also kept people from making purchases, he said.
“But one other factor that I think is really important is the urgency around shopping, which is quite different this year than it was last year,” he said. “So you think about where we were last year with supply chain constraints, tremendous demand, tremendous potential and capacity to purchase. People were buying early, and there was a prolonged holiday season last year. But this year, we think it's more pre-pandemic in terms of the shopping patterns, when you would expect to have a peak around Black Friday, a peak around Cyber Monday and a peak kind of the two weeks leading up into the Christmas period.”
That final stretch may include extra time thanks to this year’s calendar quirks. But it’s unclear how much stressed consumers will take advantage of that, amid mounting concerns about the economy, according to Forrester Principal Analyst Brendan Witcher.
“One of the biggest drivers of hesitancy for consumer shopping is their level of worry about near-term employment,” he said by email. “Although we saw stellar sales over Black Friday weekend, many companies are making headlines lately laying off thousands of workers. The aggregate effect is a pause in the consumer’s willingness to fully open their wallets and finishing those shopping lists.”