Holiday shopping begins as inflationary sentiment drops

NEW YORK (AP) — While Black Friday will mark a return to familiar holiday shopping patterns, uncertainty remains.

The US labor market remains strong, consumer spending is resilient and inflation is slowing. But higher prices for food, rent, gasoline and other household costs have weighed on shoppers.

As a result, many are reluctant to spend unless there are big discounts and are more selective about what they buy – in many cases, turning to cheaper goods and less expensive stores.

Shoppers are also dipping more into their savings, increasingly turning to ‘buy now, pay later’. Services like Afterpay that allow users to pay for items in installments, as well as run their credit cards at a time when the Federal Reserve is raising rates to cool the US economy.

These financial hardships can help drive shoppers to look for bargains.

Isela Dalencia, who was shopping for household items like detergent at a Walmart store in Secaucus, New Jersey, earlier this week, said she’s delaying holiday gift purchases until Cyber ​​Monday — the Monday after Thanksgiving — when cross-border sales pick up. Internet. Then, you’ll again wait until the week before Christmas for the best deals, unlike last year when you started buying before Black Friday.

“I shop less,” Dalencia said, noting that she will spend about $700 on holiday gifts this year, about a third less than last year.

Katie Leach, a Manhattan social worker, was browsing the aisles at Walmart but said she would start her holiday shopping during the first week of December as usual. However, this time around, she’ll be relying more on deals, her credit card, and “buy now, pay later” services to get her through the shopping season due to soaring food prices and other household expenses.

“The money is not where it was last year,” Leach said.

This year’s trends contrast with last year when consumers were buying early for fear of not getting what they need amid clogs in the supply chain. Stores didn’t have to discount so much because they were struggling to bring in items.

But some epidemic habits remain. Many retailers who closed stores on Thanksgiving Day and instead pushed rebates on their websites to reduce crowds in stores are still sticking to these strategies, despite the return to normalcy.

Major retailers including Walmart and Target are closing their stores again on Thanksgiving. Many shied away from the doorstops, with deeply recognizable items on display for a limited time that drew crowds. Instead, discounted items are available throughout the month, on Black Friday or weekend.

Against today’s economic backdrop, the National Retail Federation — the largest retail group — expects holiday sales growth to slow to a range of 6% to 8%, from a sharp 13.5% growth last year. However, these numbers, which include online spending, are not adjusted for inflation, so real spending may be down from last year.

Adobe Analytics expects online sales to increase 2.5% from November 1 through December 31, a slowdown from last year’s 8.6% pace when shoppers were unsure about returning to physical stores.

Analysts consider the five-day Black Friday holiday, which includes Cyber ​​Monday, a key gauge of shoppers’ willingness to spend, especially this year. The two-month period between Thanksgiving and Christmas accounts for about 20% of the retail industry’s annual sales.

While Black Friday still holds a strong place in the US among shoppers, it has lost ground over the past decade as stores opened on Thanksgiving and shopping shifted to Amazon and other online retailers. Stores diluted the state of the day by promoting Black Friday sales throughout the month. This year, stores started sales earlier than last year to entice shoppers to post their purchases.

Lots of shoppers like Lolita Cordero of Brooklyn, New York, are sitting out on Black Friday.

“I shop early, try to get things on sale, discount, clearance — and use coupons,” Cordero said. “I’ve never done Black Friday. I’ve heard it’s chaos, and people get hurt.”

However, some experts think Black Friday will again be the busiest shopping day this year, according to Sensormatic, which tracks customer traffic. Consumers have also returned to physical store shopping amid easing concerns about COVID-19. In fact, more stores opened than closed in the US last year for the first time since 2016 — and that gap is only widening this year, according to Coresight Research, a retail research and advisory firm.

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AP personal finance writer Cora Lewis contributed to this report.

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