Dec 2, 2019

Holiday shoppers are unfazed by recession fears

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Reproduced from an Experian chart; Chart: Axios Visuals

More Americans say they are worried about a recession next year and are getting more cautious about their spending habits and debt, but that didn't slow down their holiday shopping.

Driving the news: Data from Adobe Analytics shows Black Friday spending increased by nearly 20% over last year, rising to $7.4 billion, even as fewer retailers offered big in-store discounts. Brick-and-mortar stores saw an overall 6% decline in sales, according to preliminary data from ShopperTrak.

  • Thanksgiving sales totaled $4.2 billion online, a 15% increase from last year and a record high, according to Adobe.
  • "The drop in Black Friday physical shopping mirrors a year-long share pullback in departments stores including Macy’s, Kohl’s and Foot Locker, all of which are down more than 25% this year," CNBC notes. "Meanwhile, Amazon, the dominant U.S. e-commerce retailer, has gained about 20% this year."

What it means: The big boost in spending, particularly online, is diametrically opposed to the worry and apprehension seen in surveys leading up to the holidays.

  • A NerdWallet survey conducted in early November of 2,023 U.S. adults found that almost "two in five (37%) Americans say the U.S. economy is headed toward a recession, and 30% of those planning to purchase gifts this holiday season say they’ll spend less because of their view of the current economy."
  • "Nearly half (48%) of Americans believe holiday gifts will cost more this year compared with years past as a result of new tariffs on imports from China."
  • "Roughly 48 million Americans are still paying off credit card debt from the 2018 holiday season, far more than the 39.4 million who were paying off 2017 debt" in its 2018 survey.

A study from credit reporting company Experian showed U.S. consumers similarly unenthusiastic about the holidays, based on their survey of 1,159 consumers. The year-over-year drop in the number of people who said they felt "thoughtful" was the largest in the history of the company's survey.

  • Experian's survey also found that 66% of consumers said they would be doing their holiday shopping in cash, up 13% from just two years ago. Those who planned to make purchases with credit cards dropped to 38%, down 6% from 2017.

Watch this space: Despite the changes in how they planned to pay, Experian found consumers expected to spend an average of $1,649 during the holiday season, a "whopping" 75% increase over 2018.

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Online retailers dominate holiday shopping

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More and more people are dodging the long lines and busy parking lots of Black Friday — and planning to do their holiday shopping online instead.

The big picture: Despite headlines and reports describing a retail apocalypse, brick-and-mortar stores still easily trump e-commerce sites, with online shopping claiming only about 10% of all retail. But when it comes to shopping around the holidays, online has a much larger share.

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Cyber Monday's rise comes at Black Friday's expense

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54% of American consumers said they will do most of their holiday shopping online this year, highlighting the rise of Cyber Monday, the Washington Post reports.

Why it matters: Consumers' tendency to stay at home is forcing retailers to rethink how they offer deals on Cyber Monday and Black Friday — two of the biggest shopping days of the year — especially since the former offers loads of data that can allow for companies to make on-the-fly decisions about their offers.

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Black Friday shoppers beat online sales record

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Americans spent a record $7.4 billion in online purchases this Black Friday, AP reports.

The big picture: Strong consumer spending has largely acted as the U.S. economy's backbone for the past two quarters and most of 2018. October's Q4 retail sales figures indicated solid, albeit slightly cautious, consumers.

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