The reality is that consumers are used to tightening their belts, even during the biggest shopping festival of the year.
How many things are on your shopping list for the upcoming Christmas and New Year holidays? Are you planning to splurge on expensive things or hunt for bargains? Will you spend within your means or take on debt?
Shoppers walk around Twelve Oaks Mall on November 24, 2023 in Novi, Michigan (USA).
There is a lot of attention currently devoted to these types of questions, because they can provide economists and analysts with information about how much consumers are likely to spend during the holiday season and what their intentions are. What it means for the economic outlook at the end of 2023 and early 2024.
Consumers are used to tightening their belts
“In fact, people’s holiday purchases only account for a relatively small proportion of the economy but nonetheless, they still contribute to total consumer spending,” said Ms. Mickey Chadha, vice president of corporate finance at Moody’s Investor Services (abbreviated MIS – a leading credit risk rating company in the world), referring to spending data during the holiday season.
“It’s also a harbinger of ‘retail health’ because most retailers make the majority of their profits for the year during the pre-holiday shopping season,” he added.
In good times, when many consumers have jobs, shoppers are easily tempted to spend lavishly on holiday gifts. However, in difficult times like the present, when unemployment rates rise, consumers are more likely to cut back on spending in general and especially on holiday gifts.
So far, data on spending figures on the two days of Black Friday and Cyber Monday shows that American consumers are very “aggressive”.
Electronics are one of the items people are interested in during year-end sales.
Adobe Analytics reported online sales on Black Friday reached a record of 9.8 billion USD (nearly 238 trillion VND), up 7.5% compared to 2022, not taking into account inflation.
And for Cyber Monday, the numbers are even stronger than Black Friday. Specifically, consumers spent 12.4 billion USD (more than 300 trillion VND), a huge number, an increase of 9.6% compared to 2022.
Adobe Analytics said that during peak hours, shoppers spend 15.7 million USD (380 billion VND) every minute.
However, this year, the growth rate of dollar sales during the US holiday season is forecast to decrease to 3.3% compared to 6% last year. This is below the 3.9% average before the Covid-19 pandemic and much lower than rates seen in recent years, according to an analysis from S&P Global Market Intelligence.
Aditya Bhave, senior US economist at Bank of America, said there is a good reason behind the slowdown in sales growth. It’s mainly aimed at cooling inflation and deflation, which is especially evident in some of the most popular categories including toys, electronics and apparel, he said.
Although the inflation rate in the US, as measured by the Consumer Price Index, fell to 3.2% in October from 7.7% last October, the reality is that consumers are getting used to austerity .
As evidence, many people may delay non-essential purchases to have enough money for necessities like food and gas, or look for deeply discounted items to save money.
Ms. Mickey Chadha calls this effect “inflation fatigue” and said it may help explain why holiday sales growth may be slower this year.
Consumers are used to tightening their belts.
According to spending insights from Mastercard, consumers spent 2.5% more, unadjusted for inflation, on online and in-store purchases on Black Friday compared to last year. But that represents a sharp deceleration compared to Black Friday 2022, when sales were 12% higher than Black Friday 2021.
Tamara Charm, at global management consulting firm McKinsey and head of the company’s consumer insights center, said it’s a sign that consumers are looking for alternatives. cheaper.
In the UK , The Guardian has an article stating that Black Friday no longer attracts shoppers in this country as sales seem “slow”.
According to analysis by GlobalData for Vouchercodes.co.uk, evidence shows sales increased by just 0.4% compared to last year, reaching £8.7 billion (over VND 267 trillion) from Friday morning to Monday night.
Black Friday sales billboard on Oxford Street, London, England.
No longer a one-day event, Black Friday sales began in early November and lasted for several weeks, easing the shopping rush. Online purchases also help dampen the excitement surrounding the event. In addition, restrictions on spending money amid the cost of living crisis are also the reasons why people are no longer “interested” in Black Friday.
Retailtimes.co.uk magazine said that the fact that many customers choose the buy now, pay later method is another sign that consumers are stressed.
Use of the popular installment buying method – also known as buy now, pay later – increased 3% in Europe compared to 2022’s Black Friday. It’s worth noting that the value of those orders decreased 4% year over year, even as shoppers added more items to orders. Average cart size – or the number of items per order – increased by 24%.
The fact that customers want to combine purchases of multiple items per order and the value of each order is lower is a sign that customers are under pressure to pay in installments and accept to buy less. They also choose cheaper items when holiday shopping.
In Australia , experts found that the country’s retail sales unexpectedly dropped in October as consumers cut back on everything but food. This is said to be because many people tried to save money to spend on the Black Friday sale taking place this November.
Women buy clothes at a store in Sydney central business district (CBD), Australia.
October retail sales decreased 0.2% compared to September to 35.77 billion Australian dollars (more than 576 trillion VND), data from the Australian Bureau of Statistics (ABS) showed on November 28.
“It appears that consumers have hit the ‘pause’ button on some spending in October as they wait to take advantage of sales in November,” said Ben Dorber, head of retail statistics at ABS. know.
Have shopping habits completely changed?
Decades ago, people were used to crowds, even camping out in the middle of the night to shop on Black Friday. However, the surprising thing is that this year, that scene has almost disappeared. There are no longer long lines of people lining up in front of shopping centers and fighting for discounted items like before.
Why?
The reason for the lack of people coming to shopping centers is said to be because retailers have extended Black Friday to nearly a week, with some retailers even starting their discount programs early. early October to reduce shopping pressure on Black Friday. In addition, inflationary pressures also weigh heavily on consumers. According to Fortune, the reason is also due to the increase in online shopping.
Illustration.
Retailtimes.co.uk magazine has an article stating that sales on mobile devices on Black Friday have skyrocketed in Europe.
While mobile sales have increased steadily for years during the holiday season, mobile orders surpassed the 70% mark this past Black Friday, accounting for 73% of orders. row. According to Signifyd data, mobile sales have exceeded the overall mark for the season, currently at 70.5%.
Can the economy still prosper in 2024?
Experts interviewed by CNN news all agreed on one thing: Holiday spending data – whether good or bad – does not represent the state of the entire economy.
“It’s just one data point,” said Chedly Louis, vice president of corporate finance at Moody’s Investor Services.
Illustration.
A report she co-authored with Mickey Chadha predicts holiday sales will increase “a fairly modest 1% to 3%” this year.
“It sets the tone for where economic growth is headed next year,” said Michael Zdinak, chief economist at S&P Global Market Intelligence.
Mickey Charm said she sees this holiday sales data as “a good indication of whether consumers will continue to spend sparingly on a variety of goods.”
Even if the slowdown in consumer spending growth continues through 2024, many economists are still not predicting a recession next year.
“One of the reasons we didn’t have the word ‘recession’ in the forecast is because overall we were surprised by the consumer’s resilience,” said Bhave, the Bank of America economist. And we expect that to continue.”
Source: Compiled
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