Consumers Spending Less This Holiday Season, But Retailers Are Still Raking in Billions

Retailers are expected to make billions of dollars this holiday season despite people spending less money this year, the Associated Press reported.

Black Friday and Cyber Monday deals aren't the same this year as they were pre-pandemic. Discounts are smaller and retailers are extending their deals, some to last the entire season, instead of doing their traditional "doorbusters" deals.

Additionally, the AP reported that the new omicron variant of COVID-19 could hinder shopping behavior and businesses for stores. The World Health Organization warned that the risk of the new variant is "very high."

Regardless, shoppers are still expected to spend between $10.2 billion and $11.3 billion for Cyber Monday compared to last year's $10.8 billion. According to Adobe, people are spacing out their purchases because retailers announced discounts back in October, allowing more time for shopping.

Black Friday online sales were at $8.9 billion this year compared to $9 billion in 2020. Online sales for Thanksgiving day reached $5.1 billion.

During Black Friday and Cyber Monday sales events, shoppers are expected to pay more for items during this year's sales compared to last year's. People will pay an average of 5 percent to 17 percent more for toys, clothing, appliances and TVs, according to Aurelien Duthoit, senior sector advisor at Allianz Research.

For more reporting from the Associated Press, see below.

Cyber Monday, Sales, Computer, Pandemic
Consumers are expected to spend between $10.2 billion and $11.3 billion on November 29, 2021, making it once again the biggest online shopping day of the year, according to Adobe Digital Economy Index. Above, a consumer looks at Cyber Monday sales on her computer at her home in Palo Alto, California. Paul Sakuma, File/AP Photo

Adobe Digital Economy Index said that it was the first time online sales on Thanksgiving and Black Friday hadn't grown, and Cyber Monday could likewise see a decline compared with a year ago. Adobe, which tracks more than one trillion visits to U.S. retail sites, had previously recorded healthy online sales gains since it first began reporting on e-commerce in 2012.

Still, Cyber Monday should remain the biggest online spending day of the year. For the overall holiday season, online sales should increase 10 percent from a year ago, compared with a 33 percent increase last year, according to Adobe.

Jon Abt, co-president and a grandson of the founder of Abt Electronics, said that holiday shopping has been robust and so far overall sales are up 10 percent compared to a year ago. But he thinks Cyber Monday sales will be down at the Glenview, Illinois-based consumer electronics retailer after such robust growth from a year ago, and he worries about how the rest of the season will fare given the new variant.

"There are so many variables," Abt said. "It's a little too murky."

Harley Finkelstein, president of Canadian e-commerce platform Shopify, which has 1.7 million independent brands on its site, says so far Cyber Monday is off to a strong start. Sales on his platform were up 21 percent on Black Friday compared with 2020 and more than double compared with 2019. He believes that independent brands will see better percentage sales gains online than big national chains as shoppers gravitate more toward direct-to-consumer labels and look for brands with social conscience. And he says these brands have been able to get the inventory. Among some of the hot items on Shopify are children's couches from Nugget and luxurious linens from Brooklinen.

"I think it is a tale of two different worlds," he added.

BLACK FRIDAY BACK BUT NOT THE SAME:

Overall, Black Friday store traffic was more robust than last year but was still below pre-pandemic levels as shoppers spread out their buying in response to earlier deals in October and shifted more of their spending online. Sales on Friday were either below or had modest gains compared with pre-pandemic levels of 2019, according to various spending measures.

Black Friday sales surged 29.8 percent through mid-afternoon, compared with the year-ago period, according to Mastercard SpendingPulse, which tracks all types of payments, including cash and credit cards. That was above its 20 percent growth forecast for the day. Steve Sadove, senior adviser for Mastercard, says the numbers speak to the "strength of the consumer." For the Friday through Sunday period, sales rose 14.1 percent compared with the same period in 2020 and were up 5.8 percent compared to 2019, Mastercard reported.

Customer counts soared 60.8 percent on Black Friday compared with a year ago, but were down 26.9 percent on the same day in 2019, according to RetailNext, which analyzes store traffic with monitors and sensors in thousands of stores. Sales rose 46.4 percent on Black Friday but were down 5.1 percent in 2019, according to RetailNext. Sensormatic, another firm that tracks customer traffic, reported a 47.5 percent surge in traffic on Black Friday compared with a year ago but that number fell 28.3 percent compared with 2019.

THE CHANGING DISCOUNT LANDSCAPE:

And for the first time, discounts on Cyber Monday compared with a year ago are expected to be weaker, according to Adobe. Still, Cyber Monday remains the best day to buy TVs with discount levels at 16 percent, compared with 19 percent discounts last year. Other categories where consumers will find deals include clothing at a 15 percent markdown, compared with 20 percent last year. Computers are being discounted at 14 percent, compared with 28 percent last year, according to Adobe.

Overall holiday sales could be record-breaking. For the November and December period, the National Retail Federation predicts that sales will increase between 8.5 percent and 10.5 percent. Holiday sales increased about 8 percent in 2020 when shoppers, locked down during the early part of the pandemic, spent their money on pajamas and home goods.

Black Friday, COVID-19, Texas, Mall
Shoppers view merchandise through a store window during Black Friday in The Galleria mall on November 26, 2021, in Houston, Texas. Retailers are anticipating a busier holiday season than last year after the COVID-19 pandemic caused the quietest Black Friday in 20 years. Shortages of many goods due to supply issues are limiting the availability of some items including cars, appliances and computers during this holiday season. Brandon Bell/Getty Images