U.S. Black Friday Sales See More Tradition, Less Frenzy

U.S. consumers went out on Thursday, Nov. 22 — Thanksgiving evening — to shop for Black Friday deals, but it was not the same as previous years. A decade ago, shoppers rushed to the malls for doorbuster deals, and felt a sense of urgency to take advantage of the timely promotions before they disappeared. Today, however, online deals have stolen a lot of that sense of urgency. Walmart, for example, started offering online holiday deals in the beginning of November. As a result, shoppers indicated that they now go to Black Friday because of tradition, and for the experience to shop with their friends and family. Gen Z and millennials showed up to buy items for themselves. Most consumers, however, are expected to procrastinate — which will likely benefit retailers on super Saturday.

The deals weren’t impressive, either. Currently, retailers know that they can benefit from strong consumer confidence and are sticking to an average promotion discount of 40.8%, the same level of discounting seen since August. Anecdotally, this pricing strategy seems to work. Although checkout lines were smaller, shoppers were buying discounted items and a handful of full-price items as well.

As expected, the department stores were discounting heavily — 63% of their merchandise is expected to be on sale this holiday, as Refinitiv discovered in a collaboration with StyleSage Co. Gap offered 50% off the merchandise in its entire store, which was a slight increase from its traditional 40% discount. Apparel retailer Aritzia is one of the more popular clothing stores this year and has been posting impressive same store sales results this year. On Black Friday, the retailer had big lines despite the 10% discount on popular items.

Exhibit 1: Aritzia Same Store Sales Actuals and Q4 2018 Estimate

Source: I/B/E/S estimates from Refinitiv

Retailers will continue to post Q3 earnings next week. Tiffany’s results will be a good gauge of the luxury consumer and a number of teen retailers will give a good sense of the consumer’s discretionary spending. When parents feel good about their economic situation, they don’t complain as much when paying more than $100 for distressed jeans.

Exhibit 2: Companies reporting Q3 2018 earnings and same store sales: week of November 26, 2018

Source: I/B/E/S estimates from Refinitiv