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Shoppers broke records this holiday weekend, but inflation took its toll

Shoppers broke records over the five-day holiday weekend, with Cyber Monday sales hitting $11.3 billion.Bebeto Matthews

Shoppers spent big over the five-day holiday shopping weekend, breaking records and marking the most money spent on the year’s premier online shopping day.

Sales on Cyber Monday — the biggest shopping day of the long weekend — hit $11.3 billion, a 5.3 percent jump from last year, according to Adobe Analytics, while Black Friday online sales ticked up 2.3 percent to $9.12 billion. The figures are not adjusted for inflation, which has been hovering at decades-high levels, experts note. That suggests consumers could be spending more for less.

“If inflation is up 8 percent and sales are up 5 percent or so, people are definitely buying less, there’s no question about that,” said Forrester analyst Sucharita Kodali. She cautioned that without in-person sales numbers, it’s hard to say see a full picture.

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But there’s some bright news for retailers — it seems more people are opening their wallets and searching for deals before peak gift-giving season hits.

A record 196.7 million people shopped over the weekend, according to the National Retail Federation. That “shattered expectations by more than 30 million,” according to the trade group’s president and chief executive Matthew Shay.

“Black Friday is a very big day and this continues to be a very important bellwether for the consumer psyche as well as the strength of our economy,” Shay said during a media call Tuesday, adding that the numbers reflect a promising enthusiasm from shoppers.

Online shopping thrived this year, according to data from Adobe Analytics. Consumers spent a total of $35.4 billion online over the five-day period. They spent $5.3 billion on Thanksgiving, $9.2 billion on Black Friday, a combined $9.6 billion over the weekend, and $11.3 billion on Cyber Monday.

The NRF reported that 130 million people shopped online over the weekend, a modest growth from last year’s 128 million. A record 59 percent shopped on their phone, up from about half last year, according to Phil Rist, the executive vice president of strategy at Prosper Insights and Analytic.

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“It was very obvious this year that there was an enormous resurgence of in-store shopping,” Shay said.

But foot traffic data from the analytics firm Placer.ai found that visits to indoor shopping malls were down 2.3 percent compared to last year, while outlet malls saw a 3.9 percent decline, and open-air lifestyle centers were down .5 percent.

E-commerce platform Shopify, which tracks online and in-store data using its product, reported that sales from Thanksgiving Day through Cyber Monday broke records — 52 million consumers globally spent $7.5 billion on Shopify merchants, a 19 percent increase over last year.

“Consumers voted with their wallets over Black Friday, Cyber Monday by shopping with independent businesses,” said Shopify president Harley Finkelstein. “The future of commerce is on any surface, whether that’s shopping online or in store.”

Part of this could be because smaller merchants have been gaining share altogether by utilizing the internet, Kodali said.

Still, it’s unlikely retailers will see the same boost as the last two seasons, when there was more of a rush to spend on shopping during the height of the pandemic. Now, inflation weighs heavily on family’s budgets, and a tumultuous stock market has put some people’s savings in question. Consumer confidence slipped again in November, reaching a four-month low. The Conference Board, which releases the index report, said that inflation and interest rate hikes are the top threats to consumer confidence and economic growth.

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In 2020 and 2021, there was “pent-up demand” to make purchases after months of shelter-in-place lockdowns caused by the coronavirus pandemic, Kodali said. Now, as things have returned to a more normal routine for many, people are likely spending their money in other ways, she said, including on travel, eating at restaurants, and visiting family.

But for shoppers focused on holiday shopping, they found ways to make it work. They are savvier — hunting for deals, comparing prices — and taking advantage of buy now, pay later offerings. Transaction data from Afterpay from Black Friday to Cyber Monday showed a 120 percent growth over last year. Adobe Analytics reported that over the 5-day shopping period, there was an 85 percent increase from the week before.

The highest performing shopping categories were clothing, toys, gift cards, electronics, and media — including books and video games, according to Rist.

With the holiday season underway, retailers face a possible resurgence of supply chain snarl-ups reminiscent of last year. The looming threat of a rail strike are once again sparking fears that freight train stoppages could “have a ripple effect across the economy,” Shay said.

Retailers have been preparing for a possible strike since September, when a strike was narrowly averted. But a complete shut down would strain the rest of the supply chain.

“Any slowdown, stoppage and delay . . . will put pressure on the other distribution centers, which are already trying to recover from the pandemic,” Shay said.

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On Tuesday, Democratic and Republican leaders in Congress vowed to pass legislation averting a nationwide rail strike, saying they agree with President Biden that a work stoppage just days before Christmas would disrupt shipping and deal a devastating blow to the nation’s economy.