Consumers spent a record $9.8 billion online on Black Friday, defying predictions of financial uncertainty and increased belt-tightening, according to data from Adobe Analytics.
The online market researcher, a subsidiary of software giant Adobe, said the figure represents a 7.5% increase over the day after Thanksgiving 2022. The company found smartphone purchases led the way, rising 10.4% to account for $5.3 billion of online spending during the annual retail holiday.
Gallup and other pollsters had reported that consumers pledged to spend less this year, citing inflationary concerns. But Adobe found usage of Buy Now Pay Later programs surged by 72% during the week ending on Black Friday from Thanksgiving Week 2022, adding to the online spending spree.
Some industry insiders interviewed by The Washington Times said consumer pledges to buy less during the winter holidays are about as reliable as New Year resolutions to lose weight — and last about as long.
“It’s mostly the over-50 baby boomers who are being a little more conservative with cash this year, but a lot of that wealth gets passed down to the Gen Xers and Gen Zers,” said Brendan Heegan, founder and CEO of Boxzooka, an order fulfillment center in New Jersey that ships luxury fashion apparel and high-end consumer packaged goods. “So it doesn’t matter because the money’s not going anywhere.”
As more shoppers defer payment to stretch their budgets, Adobe Analytics has predicted that a $17 billion increase in Buy Now Pay Later purchases will drive up online holiday spending by 4.8% this holiday season — from $211.7 billion last year to $221.8 billion this year.
Black Friday discounts went a long way toward prying some of that money loose over the weekend, the company found.
Adobe said online toy prices saw an average discount of 28% on Black Friday, while electronics prices fell 26.9% and apparel dropped 24.2%. During Thanksgiving Week, prices in all three categories hit their lowest points since Oct. 1.
Total online retail revenues for the holiday season to date hit $86.6 billion on Black Friday, Adobe noted. That includes $6.5 billion in Buy Now Pay Later purchases so far.
But despite this robust spending, it’s too early to tell how much profit retailers will see in real dollars this holiday season.
According to the latest federal figures, the U.S. inflation rate was up about 3.2% year-over-year in October and labor costs were up 9%, complicating an already sluggish retail sales year.
Mr. Heegan said increased labor costs have forced e-commerce fulfillment provider Boxzooka to pay 25% more for warehouse packers, forklift drivers and supervisors than three years ago.
“We’re predicting [profits] to be mostly flat — not necessarily a decline, but not a ton of growth from current business,” he said.
The National Retail Federation has estimated that total online and in-store spending during the winter holidays will grow between 3% and 4% from 2022 to this year, landing between $957.3 billion and $966.6 billion.
That will be slower than the high growth rates that government stimulus checks sparked during the pandemic, the retail group said this month. But it’s about the same as the 3.6% annual growth the retail federation tracked between 2010 and 2019.
• Sean Salai can be reached at ssalai@washingtontimes.com.
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