Tomorrow is Thanksgiving. Black and Blue Friday will follow, putting U.S. Consumers and Stores in Face Off Over Discounts.
A Reuters/Ipsos survey found more people planned to cut holiday spending than increase in every category surveyed: clothing, jewelry, electronics, food and toys, and that 46 percent felt they could wait longer in the season to buy because of faster shipping.
Appliances, entertainment items, infant products and hardware showed narrowing discounts, MarketTrak reported, while promotions for apparel, toys and electronics were getting bigger.
Kurt Jetta, head of retail industry researcher TABS Group, found the discounts underwhelming.
“The fact that retail has been so weak coming in to the season would suggest they may need to ramp up efforts to make up for this later,” Jetta said. Consumers were cautious going into the holidays, with sales at Macy’s, Nordstrom Inc and Best Buy missing expectations in recent quarterly results. Target’s online sales fell due to a drop in demand for electronics.
The Reuters/Ipsos survey of 4,639 adults from Nov. 12-23 found 28 percent of consumers expected discounts of 50 percent or more on most items, 36 percent hoped to see promotions of at least 33 percent while 49 percent expect a minimum discount of 20 percent on most products.
A survey for Boston Consulting Group found 70 percent of consumers would spend the same or less as last year, describing the consumer outlook as “tepid.”
“Consumers have been trained to know that they can wait, and they will wait and that will force the retailers to continue to be promotional,” said Joel Bines, managing director at AlixPartners.
Polls are notoriously unreliable. Typically consumers spend more than they expect, on junk they do not need and cannot really afford.
Yet, manufacturing reports have been dismal, and retail sales tepid other than autos.
The recovery is also very long in the tooth, with the Fed poised to hike interest rates.
All things considered I expect a very weak holiday shopping season. If so, someone is sure to be blue. Will it be retailers or shoppers with buying hangovers? I suspect both.
Black and Blue Fighting
There is always a stampede or two over the latest craze toy or hot promotion that will be thrown into the ashcan six months from now. And someone lands a punch every year, in fights over who had their hands first on the last discounted thingamabob.
The best way to face the hustle and bustle of black and blue Friday is to not face it at all. I recommend a hike, a bike ride, a walk in the park, or golf if weather permits.
Mike “Mish” Shedlock