Shoppers plan to cut back on Black Friday spending this year: survey
As the holiday shopping season begins, Americans are balancing Black Friday deals with ongoing concerns about their finances.
Consumers are looking to spend less this holiday season, new data from Deloitte shows. Shoppers surveyed said they plan to spend 4% less than last year between Black Friday and Cyber Monday, citing higher costs of living and more fear of the economy.
It’s the opposite. Previous Deloitte surveys dating back to 2021 showed that shoppers planned to spend more than in previous years during the post-Thanksgiving weekend.
The decline is expected to reach both ends of the income spectrum. Consumers who make less than $50,000 annually are expected to spend 12% less than last year, according to the business services company. Shoppers who earn more than $200,000 a year say they will cut their spending by 18%.
“While we expect shoppers to plan to hold back on spending, we also expect strong engagement throughout the holiday week,” Natalie Martini, Deloitte’s senior vice president and head of U.S. consumer products and retail, said in a press release.
The company surveyed 1,200 consumers across the United States from October 15 to 23.
Shoppers are heading to malls and retail locations at a risky time, with Americans feeling increasingly fearful about the broader economy and their personal finances. Consumer confidence reached one of its lowest levels on record in November, according to a report from the European Central Bank Consumer survey conducted by the University of Michigan Which was released on Friday. It is slightly higher than the lowest level in June 2022, when inflation was rising.
Voters cited affordability as a top concern during the November election, leading to Democratic wins in Virginia, New Jersey and New York City. President Donald Trump has tried to address rising food costs by eliminating several tariffs he imposed this year on food imports, including beef and coffee from Brazil.
The University of Michigan report found that consumers were particularly concerned about their jobs and personal finances: 69% of respondents said they expected unemployment to increase over the next year, double the percentage compared to last year.
“After the federal shutdown ended, sentiment rose slightly from its mid-month reading,” Joan Hsu, director of consumer surveys at the school, wrote. “However, consumers remain frustrated by continued high prices and weak incomes.”
Inflation, which slowed earlier this year, has been rising since April. According to federal dataReaching an annual rate of 3% in September. This is stressful on Americans’ wallets, and many do not expect relief any time soon. Participants in a consumer survey conducted by the University of Michigan expect inflation to reach 4.5% by next year.
Retail earnings reports over the past few weeks point to some troubling consumer trends. Walmart posted strong results last week as the discount retailer benefited from shoppers looking to save money on essential items like groceries and other essential goods. The company said higher-income households shop more in-store for bargains, while lower-income households are under greater financial pressure.
“As pocketbooks increase, you see more consumer dollars going to necessities versus discretionary items,” John David Rainey, Walmart’s chief financial officer, said during the company’s earnings call.
Discount fashion retailers such as Gap and TJX Cos., which owns the TJ Maxx and Marshalls chains, also reported strong quarterly earnings, another sign that shoppers are trading down and looking for cheaper options. Target and Bath & Body Works stores, seen as stores that encourage extravagance, struggled during the previous quarter.
With their bank accounts already depleted, consumers are increasingly turning to financing to afford their purchases. A Last month’s report from PayPal It found that half of shoppers plan to use buy now, pay later services for their holiday shopping. These services, which include apps such as Klarna, Afterpay and Affirm, allow customers to make a purchase and then pay it off in instalments, usually at 0% interest.
These apps are especially popular among younger shoppers. According to a study by Deloitte, 39% of Gen Z and Millennials will use buy now, pay later apps for their Black Friday spending. Many shoppers use these services to spread their spending over a longer period of time, but some worry that it tempts people to spend more than they can afford and could get them into debt they didn’t expect.