US retailers discounted heavily on Black Friday to clear out bloated inventories, but customers responded with only modest traffic, leaving profitability in doubt for many chains.
Brick-and-mortar retailers, which were hit hard by COVID-19 closures and shoppers seeking to avoid the virus, saw in-store traffic on Friday tick up 2.9 percent from last year’s shopping event, data compiled by Sensormatic Solutions showed.
US consumers are still spending, but they are growing more cautious after contending this year with the highest inflation rates in four decades. They are also keeping a sharper lookout for deals, and retailers — many of them still heavy with inventory after misjudging an erosion in demand — are trying to stand out by dangling the deepest discounts since before the COVID-19 pandemic.
The US holiday shopping season is likely to see modest or break-even growth in annual sales, said Melissa Minkow, director of retail strategy at digital consultancy CI&T Inc.
“That’s still a win,” she said, contrasting the outlook with the UK, where high inflation has caused consumers to pull back noticeably on spending.
Still, the steep Black Friday discounts are likely to squeeze retailers.
“Profits will not be where retailers want them to be,” in part because they “couldn’t pass all of the inflationary costs off to consumers,” Minkow said.
E-commerce spending on Black Friday rose 2.3 percent to US$9.12 billion, Adobe Analytics data showed.
That is far less than the US inflation rate of almost 8 percent during the 12 months ending last month.
Salesforce Inc said the average consumer discount on Black Friday was expected to be greater than 30 percent, up from 28 percent last year and close to the 33 percent rate in 2019.
“People are just plainly buying less products because their dollar isn’t going as far,” Salesforce vice president of retail Rob Garf said.
At Crossgates Mall in Albany, New York, low-cost brands and higher-end trendy retailers had the most foot traffic, while middle-market stores were desolate.
Gap Inc’s Old Navy, which was offering 60 percent off most items, had a checkout lines so long that some shoppers turned around as soon as they entered the store.
Drawing big crowds at the higher end were leisure athletic-wear favorite Lululemon Athletica Inc, which had only a few racks of discounted merchandise, and American Eagle Outfitters Inc’s Aerie, a popular intimates brand among Generation Z shoppers.
Meanwhile, stores such as Gap’s Banana Republic, Macy’s Inc and Urban Outfitters Inc had no lines at all, and only a handful of shoppers.
The healthy traffic at some retailers shows that many US consumers are still spending at a robust clip.
US retail sales on Friday were up 12 percent year-on-year, excluding automotive, according to Mastercard SpendingPulse, which measures in-store and online purchases across all forms of payment.
The spending increase is not adjusted for inflation.
However, crowds appeared to be an exception. The checkout line at the toy section at a Macy’s in Stamford, Connecticut, had no wait, and the cashier said the store had prepared for more shoppers. A Walmart in suburban Dallas also had cashiers standing at the ready with no lines.
“The historic raucous atmosphere of Black Friday may be in the past,” as more consumers shop online and spread their spending out over a longer period, Piper Sandler Cos retail analyst Edward Yruma said in a report.
Intel Corp has landed Microsoft Corp as a customer for its made-to-order chip business, marking a key win for an ambitious turnaround effort under chief executive officer Pat Gelsinger. Microsoft plans to use Intel’s 18A manufacturing technology to make a forthcoming chip that the software maker designed in-house, the two companies said at an event on Wednesday. They did not identify the product, but Microsoft recently announced plans for two homegrown chips — a computer processor and an artificial intelligence (AI) accelerator. Intel has been seeking to prove it can compete in the foundry market, where companies produce custom chips for clients. It
AI EFFECT: Nvidia CEO Jensen Huang moved up to 21st on the Bloomberg Billionaires Index on Thursday after his wealth skyrocketed by US$9.6 billion to US$69.2 billion The artificial intelligence (AI) mania sparked by Nvidia Corp’s sterling results has given a lift to Asia’s major chipmakers, but it has not closed the valuation gap with their US peers. A Bloomberg gauge tracking Asia’s top semiconductor firms, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co, widened its under-performance against the Philadelphia Semiconductor Index this week. While the Asian index trades at 17 times forward earnings, the US measure is at 27 times, pushing the gap close to a record after Nvidia’s blowout revenue outlook reinforced investor conviction in the boom in generative AI use. Nvidia’s 8 percent
The arrival of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in Japan’s Kumamoto Prefecture marks the regaining of the area’s pivotal position established during the Meiji Restoration in the 19th century, a local business leader said in an interview with CNA. The first fab of Japan Advanced Semiconductor Manufacturing Inc (JASM), TSMC’s majority-owned manufacturing subsidiary in Kumamoto, is set to open today. After the 1868 Meiji Restoration, Kumamoto was of key importance as it was home to a major garrison national defense. However, that position was ceded to Fukuoka after World War II as Japan turned to foreign trade for post-war economic development,
OVERSEAS: The company is expanding with OSAT development in India, an EV factory in Thailand and possibly an 12-inch fab in Malaysia, Young Liu said Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, is expected to forge deeper and more comprehensive collaborations with its main customer Apple Inc, the company’s chairman said on Tuesday. Speaking before a dinner banquet on Tuesday to mark the company’s 50th anniversary, Hon Hai chairman Young Liu (劉揚偉) said that the two companies would forge a deeper and more extensive partnership. “Everything that should be there will be there and nothing will be missed,” Liu said, when asked about the progress made in Hon Hai’s collaborations with Apple in the artificial intelligence and electric vehicle (EV) fields. Hon