Texas Border Business
It’s that time again – let the holiday shopping begin in earnest! The National Retail Federation (NRF) projects that a record number of people (183.4 million) will be shopping during Thanksgiving weekend. Traditionally among the busiest shopping days of the year, “Black Friday” is often thought to be the day when retail outlets become profitable (or “go into the black”) for the year. In reality, the term was first used in the 1860s to describe a gold market collapse engineered by some of the so-called “robber barons” and became associated with Thanksgiving in the 1960s in order to describe the chaos that often occurred in Philadelphia on the day between the holiday and the Army-Navy football game.
Depending on the analyst/survey, holiday sales are projected to expand by a range of about 3% to 8% over last year (our analysis shows about 6%). That translates into about $1 trillion in retail spending during the season. Much of the increase is due to inflation, with higher prices for clothing, toys, and other gifts pushing up totals.
Inflation over the past few years has strained budgets, keeping holiday spending from rising as much as it might otherwise (although incomes are now increasing more than prices). Shoppers will be searching for discounts to maximize their “bang for the buck.” Retailers are responding with sales promotions that seem to become earlier and more prolonged every year. In addition to gifts, people plan to spend on food, décor, and experiences. Many will be traveling, which adds to outlays.
Online shopping plays an ever more important role, with about 20% of purchases expected through such channels. Most people are doing some browsing on websites and/or social media, even if they then patronize brick-and-mortar stores to actually buy. In addition to convenience and selection, online browsing often provides access to reviews and other detailed information. An NRF survey found that 57% of consumers planned to make holiday purchases online, followed by department stores (46%), grocery stores and supermarkets (46%), and discount stores (45%).
Another shift is that more brands and stores are seeking to distribute sales throughout the year by offering savings opportunities at other times. Amazon’s Prime Day is the most prominent such effort, and many others have joined in the trend. It’s a win for retailers to more equally spread their volumes and traffic, and it enhances the ability of consumers to obtain desired items at better prices.
About 70% of economic activity is typically driven by consumer spending. Holiday sales are particularly important to many retailers, not to mention the vast array of industries involved in production and distribution of the various items and the millions of employees making it happen. Happy shopping! Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
