Thanksgiving Holiday Shoppers Expecting Big Discounts
For many Americans, the Thanksgiving holiday weekend has become as much an annual tradition as picking out the family Christmas tree. The Thanksgiving holiday weekend is defined as the five shopping days that start on Thanksgiving, includes Black Friday, and runs through Cyber Monday. It’s when the biggest of the holiday shopping discounts and promotions tend to be offered.
For some, it means waiting in line – potentially for hours before the store even opens – to get the ultimate deal on heavily discounted, yet limited supply, of consumer goods. For others, their enjoyment comes not from actually shopping, but from simply watching the ensuing chaos, and sometime stampedes, among shoppers once the doors are actually open.
Yes, whether at the family dinner table or office water cooler, we’ve all shared or heard stories of Black Friday escapades that, over time, have reached near legendary status. The swearing, pushing, shoving, and in some cases fighting, just to secure one of the limited quantities of heavily discounted products. In one noted Black Friday incident, a California woman was arrested after she pepper-sprayed fellow shoppers while jockeying for one of the last Xbox video game consoles.
According to the National Retail Federation, a record-high 183.4 million Americans are expected to shop either in-store or online during the Thanksgiving holiday weekend, slightly above last year’s total of 182 million. Over the years, however, the rise in online shopping has gradually changed the dynamics of this five-day shopping extravaganza. On the positive side, it’s likely to have reduced the number of retail pepper-spraying incidents.
Adobe Analytics expects online sales during the five-day Thanksgiving holiday weekend to reach a record $40.6 billion. This is a hefty 7% increase over last year’s sales total. Online sales during the entire 61-day November-December retail holiday shopping season are expected to reach $240.8 billion, up 8.4% from last year.
The biggest online shopping day during the holiday weekend is Cyber Monday. In fact, Cyber Monday is typically the biggest online shopping day of the year. The retail industry first coined the term “Cyber Monday” in 2005 to encourage consumers to shop online. Adobe Analytics projects a record $13.2 billion in online sales during this year’s Cyber Monday. The next biggest online shopping day during the holiday weekend is Black Friday ($10.8 billion) followed by Thanksgiving Day ($6.1 billion).
Retailers are well aware of the price sensitivity facing inflation-weary consumers. In response, they are expected to offer up large discounts to entice online shoppers. Adobe Analytics expects online discounts for electronics to peak at 30% off listed price while online discounts for toys should reach 27%. Other categories where shoppers can expect large online discounts are on TVs (24%), apparel (23%), computers (23%) and sporting goods (20%).
Another major trend is the use of Buy Now, Pay Later (BNPL) services. Over the entire 61-day holiday shopping season, Adobe Analytics projects online BNPL sales should reach a record-high $18.5 billion, an 11.4% increase from last year.
BNPL is a short-term financing option that allows consumers to make point-of-sale installment loans for their purchases. For example, payment provider Affirm partners with major retailers such as Amazon, Walmart, Target and Apple to provide consumers a BNPL option. Other BNPL options include Klarna, PayPal and Afterpay. BNPL providers typically offer short-term fixed loans with low- or no-interest financing. This allows consumers to avoid using their high-interest credit cards. According to LendingTree, the average interest rate on new credit cards is a blistering 24.61%.
With plenty of expected deals to be had, it will pay to shop around and hunt down those money-saving deals and promotions. Good luck and happy shopping!
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
