July 20, 2024

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Black Friday bonanza could lead to a festive hangover for retail

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Last week, while most of my family was watching American football in a turkey-induced stupor, I got bored. So I pulled out my smartphone and ordered a new camera lens to boost the quality of my holiday snapshots.

Turns out I wasn’t the only one. US online shoppers have busted through forecasts, shelling out a record $38bn for the post-Thanksgiving period. The $12.4bn spent on what is known as Cyber Monday made it the biggest US digital shopping day of all time, according to Adobe, which tracks online spending.

This spree — up nearly 8 per cent on last year — has raised hopes of a bumper festive season. It was accompanied by a bigger surge in visits to indoor malls and department stores than in 2022, as well as somewhat more modest year on year increases in overall credit card spending, according to Placer.ai and Mastercard.

Though recent economic sentiment surveys have been negative, the resilience of American consumers has surprised forecasters all year. Retail spending helped to drive explosive 4.9 per cent gross domestic product growth in the third quarter.

But the economic picture remains murky heading in to Christmas. Labour markets are slowing, mortgage rates remain high and the resumption of student loan payments after a pandemic pause could crimp spending. Then again, cooling inflation and falling gas prices might also translate into shoppers with a bit more money to splash.

That puts the onus on companies to be cautious about reading too much into a few days of record spending, particularly when it is fuelled by Black Friday promotions.

Many were caught out last year when a pandemic-fuelled surge in goods spending ebbed and customers shifted back to buying services. E-commerce groups that rolled up companies that sell through Amazon are struggling, and Amazon itself was left with extra staff and warehouses after mistaking a…

2023-11-29 00:01:53

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