US retailers bet on deals to boost sales on Black Friday

S&P 500 index hits record high as Wall Street's main indexes rise in a shortened session

Black Friday shoppers at Saks Fifth Avenue in New York. AFP

Promised major discounts have traditionally brought American shoppers to retailers across the country on Black Friday, but for the most part, stores' efforts did not appear to be enough to draw early crowds.

Retailers that cater to middle-income consumers went into the holiday shopping season hoping that exclusive products and special deals could help revive demand in an otherwise humdrum year.

Best Buy brought back “doorbuster” events, offering big, limited-time promotions on popular items following a five-year hiatus, Bloomberg reported. Target was counting on exclusive items such as Taylor Swift’s The Eras Tour Book to drive demand. Meanwhile, Kohl’s discounted more electronics and appliances from brands such as Dyson, Dr Dre and Keurig.

Their efforts speak to the high stakes that many retailers are facing after a year of sluggish sales. Some are kicking off the biggest shopping holiday with new chief executives, raising the stakes even higher to generate stronger sales. To add to challenges, the shopping season is five days shorter this year than it was in 2023 due to a late Thanksgiving.

US retailers garner about 20 per cent of their annual sales during the holiday season, and early projections have pointed to this year being softer than previously.

Online and in-person US holiday sales are expected to rise between 2.5 per cent and 3.5 per cent this year, according to the National Retail Federation, an industry group. That is behind last year’s growth of 3.9 per cent. Those figures reflect sales for November and December and are not adjusted for inflation.

Some of the slowdown may stem from early gift buying that is not captured in holiday sales data for the last two months of the year. Various sales events in October – such as Amazon’s Prime Day – probably pulled forward shopping demand, according to Coresight Research, affecting traditional holiday sales days like Black Friday. About 52 per cent of consumers began holiday shopping before November, higher than last year.

E-commerce sales heading into Black Friday were strong, as shoppers continue to shift their spending from stores to websites and mobile apps. US consumers spent a record $6.1 billion online on Thanksgiving, up 8.8 per cent from the same period a year earlier, according to Adobe Analytics data. Growth outpaced last year, which was up 5.5 per cent year over year.

The pace of shoppers visiting stores in person was expected to slow somewhat this Black Friday versus last year, according to Grant Gustafson, head of retail consulting and analytics at Sensormatic Solutions, a retail technology provider. Shoppers are tired of price increases since the pandemic and are prioritising spending on essentials, he said.

Last year, in-person store visits rose 5.2 per cent on Black Friday versus the previous year. “It may be a stretch to expect the same level of year-over-year growth we saw last year,” Mr Gustafson said.

Shoppers are expected to buy more merchandise using mobile phones and laptops on Black Friday. US shoppers are expected to spend $10.8 billion online, up nearly 10 per cent from a year ago, according to projections from Adobe Analytics, which keeps track of devices that use Adobe's software to help power more than one trillion visits to US retail sites.

Still, the US retail trade group the National Retail Federation expects roughly 85.6 million shoppers to visit stores this year, up from 76 million last year.

Meanwhile, the S&P 500 index hit a record high as Wall Street's main indexes rose in a shortened Black Friday session, lifted by select technology stocks, while retail was in focus as the holiday shopping season kicked off.

Information technology stocks including Nvidia helped boost the benchmark S&P 500, while the industrial and financial sectors lifted the blue-chip Dow. Nvidia gained about 2.4 per cent. Shares of Target rose 0.5 per cent, Hasbro gained 1.2 per cent, Macy's was up almost 1 per cent and Nike also gained 1 per cent.