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— This is the script of CNBC’s news report for China’s CCTV on November 24, 2023.
This Friday, Americans will welcome the annual shopping festival that with discounts, Black Friday. According to the National Retail Federation’s forecast, this Friday may also become the busiest shopping day in the United States this year. The NRF predicts that 72% of American consumers will shop online or offline, a slight increase from last year’s 69%. Good discounts and the established holiday tradition of shopping are the two main reasons Americans consume on this day.
However, “caution” became a key word for many American consumers this year. Consumers have gradually spent their savings accumulated during the pandemic, and the high inflation and high-interest rates still exist. This has led consumers to explore alternative payment methods.
Data from the New York Federal Reserve shows that in the last quarter, consumer credit card balances increased by $154 billion, the largest year-on-year increase on record. A recent report from Adobe Analytics also points out a significant increase in the “Buy now, pay later” payment type compared to the same period last year. The NRF expects that although consumer spending will continue to grow this year, the growth rate will decline. This also can be evidenced by guidance from retailers’ financial reports.
The CFO of one of America’s largest retailers, Walmart, told CNBC that the trends in the last few weeks of October have led them to reconsider the financial health of consumers. Data from the U.S. Department of Commerce shows that in October, retail sales in the United States decreased by 0.1% month-on-month, the first decline in six months. As a result, Walmart’s guidance reflects a conservative stance, with the recent announcement that the expected EPS for this year is between $6.4 and $6.48, below market expectations.
Additionally, various executives from retailers such as Target and Macy’s have expressed similar views, believing that consumers are now tightening their budgets and being more cautious and hesitant when making purchases. Against the backdrop of consumers seeking value, analysts suggest that luxury goods sales may weaken this year.
Ed Yruma
Piper Sandler’s managing director
“Clearly, the consumers looking for great deals, great value, you know, electronics always popular during the holiday season. Luxury is, as some people have pointed out has been kind of weak, right? That that luxury consumer that has been so resilient over the past 18 months is finally starting to pull back.”
The consumers’ preference for offline experience is another interesting trend to watch this year. Zeta Global, a company using AI to predict business and consumer trends, reports that Generation Z, those born in the late 1990s to the early 2010s, values shopping experiences more. They prefer the process of selecting products by themselves, in the stores, which may affect businesses that only sell products online, benefiting those adopting a hybrid online-offline model.
David Steinberg
CEO of Zeta Global
“The other thing that’s really been interesting is more than half of Gen Z are saying they want to do their holiday shopping in person that’s going to play really well for the companies that have retail and hybrid.”
However, some challenges faced by American retailers may affect consumers’ in-person shopping experiences, including a surge in thefts leading many businesses to lock up their items, tight manpower, insufficient inventory, and long waiting times. These are areas that businesses need to optimize.
This holiday shopping season in the United States will continue until Cyber Monday next week, or even until Christmas in December. Faced with a challenging macroeconomic environment and increasingly cautious consumers, many retailers believe that sales during this shopping season are full of uncertainty.
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