Let’s take a look at some stats from the holiday weekend.
How much are people spending?
What does this tell us about the economy?
How confident do households feel about their income and budgets?
Let’s look at the numbers and see what stories they’re telling us.
U.S. shoppers spent a record $11.8 billion online on Black Friday.
That’s up 9.1 percent from last year, according to Adobe Analytics.
Holiday shopping is expected to top $1 trillion for the first time this year, according to the National Retail Federation.
Last year? People “only” spent $976 billion.
But the data is a little bit contradictory —
We’re seeing record-breaking online sales, but people are spending less individually.
The average household is spending $890 this year. That’s down slightly from $902 last year.
So — if people are spending less — how is it that holiday shopping is expected to increase?
It’s because MORE people are participating. 186.9 million people are shopping this year, up from 183.4 million last year. (All stats come from the National Retail Federation unless otherwise indicated).
That’s why sales are still expected to grow 3.7 percent to 4.2 percent.
So more people are holiday shopping.
But they’re spending less on average.
What does this tell us about consumer confidence?
The pullback in spending shows that people are worried. The cost of everything from groceries to insurance is up — and incomes haven’t risen enough to keep up with rising prices.
This tracks with data from the University of Michigan, which found that consumer sentiment in November is the second lowest on record. It’s just above the June 2022 low.
Stock performance tells the same story.
Retail stocks in consumer discretionary and staples have (relatively) flatlined this year. The iShares U.S. Consumer Discretionary ETF is up 6.4 percent YTD as of Nov 26, and the iShares U.S. Consumer Staples ETF is up 7.2 percent YTD.
By contrast, the iShares Core S&P 500 ETF is up 17.3 percent YTD.
But there’s one outperformer in the consumer discretionary / retail category — discount chains. Dollar General is up 44 percent YTD, and Dollar Tree is up 47 percent YTD.
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Here’s what the data is telling us:
Americans are adapting to economic uncertainty.
They’re not giving up on the holidays. But they’re being strategic about it.
People are hunting for deals. They want to stretch their dollars further.
More households are participating in holiday shopping, but each one is being more careful.
More things we know:
First, people are shopping earlier and earlier — which means the holiday season is getting longer.
Nearly half of shoppers – 42 percent – now browse and buy before November even starts, according to the NRF.
We’re seeing retailers start to react. One major example is Amazon. Last year, Prime Day was in July; they kept it totally separate from the holiday shopping season.
But this year, they moved Prime Big Deal Days to October 7-8, and offered discounts that peaked at 18 percent. They’re targeting the early holiday wave. They’re doubling the discounts, to 45 percent, for Cyber Monday.
Even with all this stretching of the season, most people aren’t buying it.
According to an NRF survey of over 8,000 households, 63 percent still plan to do the bulk of their shopping over the traditional holiday weekend.
Let’s look at when people shopped:
Black Friday: 130 million shoppers
Small Business Saturday: 67 million
(Does This Day Have a Name?) Sunday: 38 million
Cyber Monday: 74 million expected
(Don’t Forget About Giving Tuesday!)
What are people buying? The hot gifts this year: Legos, Barbie, Hot Wheels, Lebubu, Nintendo, and K-Pop Demon Hunters.
But not all holiday shopping is on gifts. In fact, of that $890 average spend, about two-thirds ($628) goes to gifts.
The other $262 is for decorations, cards, holiday meals, and candy.
Basically, the typical split is 1/3 experiences, 2/3 stuff.
Here’s the thing about economic uncertainty.
We can’t control inflation. We can’t control the job market.
But we can control how we advocate for ourselves.
While everyone’s hunting for 18 percent discounts on Amazon, there’s a bigger opportunity most people miss.
The raise you don’t ask for.
While everyone else is focused on finding the best Cyber Monday deals, you could be learning skills that pay dividends for years.
One successful negotiation can earn you more than a lifetime of BOGO deals and cashback rewards.
The data shows us something important this holiday season.
People are holiday shopping in record-breaking numbers — more than $1 trillion this year — but spending $12 less per household as compared to last year.
They’re driving Dollar General and Dollar Tree’s stock up 44 and 47 percent, respectively, while overall general retail lags the market.
People are starting to look for deals in early October, but still doing most of their shopping on Black Friday/Cyber Monday.
This tell us:
When money gets tight, people get creative.
We’re putting all this effort into spending smarter.
Maybe it’s time to focus on earning more.
