Consumer Spending Falls During Pivotal Early Holiday Shopping

Consumers ready for holiday shopping, the busiest time of the year for retail outlets. (Photo: Reuters)

Consumers spent an average 6.4 percent less on in-store purchases than they did on Thanksgiving weekend last year, according to a report from the National Retail Federation.

Early holiday promotions and increased online shopping took a toll on in-store U.S. sales, but the NRF estimated shoppers on average spent $380.95 in total at stores this holiday weekend, which began on Thursday, compared with $407.02 a year ago, and total consumer spending during the pivotal holiday shopping weekend fell about 11 percent to $50.9 billion.

NRF President and Chief Executive Matthew Shay said there is “an evolutionary change in holiday shopping by both consumers and retailers, and expect this trend to continue in the years ahead.”

The new data underscores the growing slice of the market taken from online sales and the waning importance of Black Friday. But the trend had already to begun before the prominence of online sales. Up until a few years ago, Black Friday traditionally kicked off the holiday shopping season in the United States, but more retailers open their doors on Thanksgiving Day and start discounting merchandise earlier in November.

According to the NRF of 4,631 consumers, most shoppers said they shopped online on Black Friday (46.7 percent), even though 36.3 percent say they shopped online on Saturday. Further, more than one-quarter (26.2 percent) of holiday shoppers were online on Thanksgiving Day.

The Thanksgiving weekend is an early gauge of consumer sentiment and consumer confidence during a season that generates about 30 percent of sales and nearly 40 percent of profit for retailers. Of course, consumer spending represents nearly two-thirds of gross domestic product.

As far as products, Americans found discounted high-end apparel, televisions and toys to be the most popular this year, followed by video games, home furnishings and jewelry, according to the NRF survey.

Department stores like Macy’s (NYSE:M) were the most visited followed by discount retailers like Wal-Mart (NYSE:WMT), Target (NYSE:TGT) and electronic chains like Best Buy <BBY.N>.

On Saturday, research firm ShopperTrack said sales at retail stores fell 0.5 percent.

RetailNext, another analytics firm, on Sunday said it found overall shopper traffic on Black Friday fell 14 percent, but on average shopper spending rose 1.9 percent, as conversion rates were higher, with shoppers spending more once in the store.

“Sales on Black Friday were very disappointing but retailers managed to drive a lot of people to their websites early on which helps us remain optimistic about the overall holiday season,” said Shelley Kohan, vice president, retail consulting, at RetailNext.

However, the NRF stuck to its forecast for retail sales to rise 4.1 percent this holiday season.

“Though much shopping has been done by this point, it’s important to remember that there are still many weeks left in the holiday season, and savvy shoppers will continue to look for exclusive prices to purchase holiday gifts,” said Prosper’s Principal Analyst Pam Goodfellow.

“As competition for customer dollars heats up, consumers will be the ultimate winners in the end. Shoppers this year have made it clear that they no longer only value deep discounts on Thanksgiving and Black Friday, they want the entire package from beginning to end – free shipping, early promotions, convenient ways to use their mobile devices and, of course, hard-to-beat online deals.”

The survey, conducted November 28-29, 2014 by Prosper Insights & Analytics for NRF, polled 4,631 consumers and has a margin of error of plus or minus 1.5 percentage points.