COVID fears and fewer "doorbuster" sales thinned crowds the day after the U.S. Thanksgiving holiday, which kicks off the year-end holiday shopping season.
On the same day, the World Health Organization named the newly identified omicron variant of the coronavirus as a "variant of concern," triggering worldwide alarm and a selloff in the U.S. stock market.
Stores on Black Friday had the lowest level of clearance goods for sale in five years or more, Cowen analysts said in a note. Many shoppers chose to pick up merchandise curbside rather than venturing inside stores.
Black Friday retail sales are up 29.8% versus 2020 through 3 p.m. ET, according to Mastercard SpendingPulse.
Consumers spent $6.6 billion up until 9 p.m. ET on Friday, according to Adobe Digital Economy Index, which expected total spending of between $8.8 billion and $9.2 billion for the day.
Walmart and Target stood to outperform other retailers in part because of their buy-online-pick-up-at-store services, Cowen said. Target added more than 18,000 "drive-up" parking spaces, more than doubling spots versus last year. The company said its most popular Black Friday deals included $219.99 for a KitchenAid professional stand mixer that regularly sells for $429.99, and savings of up to $60 on Apple Watches and AirPods.
Several retailers - including Walmart, Target and Best Buy - are expected to post lower fourth-quarter profit margins because of tight inventory and higher costs for raw materials, freight and labor. "Even though the holiday season should be okay from a sales standpoint -- because retailers are discounting less -- the margins won't necessarily be higher because of inflation," said Forrester Research analyst Sucharita Kodali.
U.S. consumers are entering the holiday season flush with cash thanks to a still-hefty pile of savings from multiple rounds of government pandemic relief and double-digit wage increases as businesses compete for workers. Yet retailers had lured shoppers to make holiday purchases as early as September this year, because the supply chain logjam https://www.reuters.com/business/autos-transportation/containergeddon-supply-crisis-drives-walmart-rivals-hire-their-own-ships-2021-10-07 has prevented them from quickly replenishing year-end merchandise.
A Deloitte survey showed people had spent 80%-85% of their holiday gift budgets even before Black Friday. For November and December, online sales are estimated to hit a record $207 billion, up 10% from last year, according to Adobe Digital Economy Index. The National Retail Federation has forecast combined brick-and-mortar and online holiday sales to reach between $843.4 billion and $859 billion, 8.5% to 10.5% higher than last year.
Elver Gomez, a 21-year-old student in Chicago, said he didn't find the Apple and Microsoft laptops he wanted while shopping at a Best Buy store Friday morning. "It seems like this year it's either out of stock" or for sale at what he said was "not that great of a price." Best Buy added a message to its website warning of "limited qualities" and "no rainchecks."
Electronics - in short supply due to a global chip shortage - had the highest out-of-stock levels, followed by personal care, and home and garden, according to Adobe. Through most of November, out-of-stocks were up 261% versus 2019.
(Reporting by Richa Naidu and Arriana McLymore; Additional reporting by Lisa Baertlein and Maria Ponnezhath in Bengaluru; Editing by Nick Zieminski and Leslie Adler)
By Richa Naidu and Arriana McLymore