The holiday season is well underway. Turkey feasts are over, and twinkling lights are being hung. The chill in the air reminds us that it is almost time for hot chocolate and carolers. The start of the holiday season is of course also the start of the holiday shopping season.
The official kickoff of the shopping season is Black Friday. Its name was allegedly coined because this was the day when retailers’ books went “into the black,” and their remaining revenues for the year went straight to the bottom line. This makes for an amusing explanation even if nobody is sure that it is true.
Black Friday has been the biggest US shopping day for decades. However, this year’s shopping bonanza was a bit more muted than in years past. There were fewer midnight deals and the early morning lines at everyone’s favorite big-box stores were noticeably shorter. While in-person shopping was muted, online sales on Black Friday set a record at over $9.1 billion. And that’s before Cyber Monday, the traditional start of the online shopping season!
The hot tickets so far this year have been electronics, which according to NPR saw a 221% increase in Black Friday sales relative to an average day in October. Today’s Cyber Monday sales are anticipated to continue this trend, with significant discounts on things like personal drones, Xboxes, and everything Bluetooth. Online sales on 2022 Cyber Monday are expected to reach a record of $11.6 billion, an 8.5% increase over the last year. Inflation-weary consumers who have been hoping for strong discounts may finally be getting their chance to buy their stocking stuffers.
Electronics are not the only thing seeing strong discounts though. In a departure from the pandemic-driven supply crunches of last two years, many retailers are now facing significant surpluses of their goods. This is particularly true for the apparel industry, where overstocking and mis-stocking of products led to a 3.3% pre-sale discount in October relative to the same period in 2021. These surpluses are sure to prompt even greater discounts heading into the holiday season. Some who follow the industry even expect the discounts to increase as we get closer to the end of the year. This would be a truly great development for holiday gift procrastinators!
Despite the retailer discounts and record sales figures, this holiday season is sure to be tough for many families. Given this, it is becoming more popular to do family Secret Santa events instead of gifts for everyone. It is also a time to consider gifts of meaning instead of new gadgets and clothes. Charitable contributions in the name of family members’, and even matching of other family members donations, are becoming a more popular choice for those who can do so. Whatever your choices, we hope you have much fun in the buying and giving of your holiday gifts.
Carey S. Blakley, CFA