Winners and losers of Black Friday 2022

2022/11/29 Innoverview Read

As COVID-19 pandemic restrictions cooled off in 2022, many retailers may have hoped for a less complicated Black Friday this year.

But brewing up a new battle for both brands and consumers, inflation took the stage months before the shopping event began.

Heading into the holiday, some estimates showed that while in-store shopping could make a return, inflation (which was up 7.7% in October according to the Consumer Price Index) could thwart consumer spending, as shoppers expected to get less for more money. 

Predictions showed higher-income shoppers tightening their budgets, and discretionary spending at some big retailers decreased throughout the year as consumers dealt with rising grocery bills.

Several retailers lowered their outlook for this quarter before the shopping event even started. Target tightened its Q4 outlook in November after earnings came in below expectations, and e-commerce native ThredUp did the same despite its focus being on secondhand goods  a category that could normally do well for consumers looking to save.

All of this laid the groundwork for a not-so-joyous holiday season for shoppers. That said, Adobe Analytics data shows that online spending on Black Friday this year reached $9.12 billion, up 2.3% year over year. 

The picture of how the retail industry performed is more complex than a single number. Given the macroeconomic pressures consumers face right now, it is hard to say that any winners in retail will remain so for the rest of the season. But some trends stood out.

Here’s how retailers actually fared during the industry’s most highly-anticipated holiday.

Winner: Buy now, pay later … sort of

Thanksgiving and Black Friday may have been great days to be a buy now, pay later service provider. Given the economic pressures many shoppers face right now, BNPL payment options offered a way for consumers to still get the goods they wanted.

Black Friday predictions from Deloitte projected increased use of these services, with 48% of survey respondents saying they planned to use credit cards and 37% expecting to use BNPL.

On Thanksgiving Day, online BNPL revenue increased by 1.3% year over year and orders were up 0.7%, according to Adobe data. More telling is that some shoppers are using BNPL for lower-priced goods instead of high-ticket items, with the average order value for BNPL purchases decreasing in the U.S. by 6% on Thanksgiving, according to data from Salesforce. 

Orders using BNPL rose by 78% the week of Nov. 19 to Nov. 25 when compared to the week before, according to Adobe. Additionally, overall revenue from BNPL is up 81% during the same period.

“It’s a positive sign in the immediate term, that consumers are looking to extend their wallet further and do more,” Rod Sides, global leader at Deloitte Insights, told Retail Dive.

But that immediate-term positive is a red flag in the long term, according to Sides, who added “we now have much higher interest rates, and they’re gonna start to hit any credit card balances. With buy now, pay later, it tells you the consumer is challenged ... in the long term, it’s a warning sign.”

Loser: Long lines

The days of long lines and fights over highly sought-after products may really be dead.

While in-store shopping was more in focus this year due to loosening COVID-19 restrictions, that doesn’t mean there was a return to the old chaos of Black Friday shopping. Several analysts noted that traffic was brisk and certainly apparent at a variety of stores, but didn’t have the long wait lines the holiday used to be infamous for.

“People have been shopping today. We’d expected brisk traffic and big sales numbers. We got the brisk traffic, and we’ll soon know if that translated into positive numbers for the retailers,” Katherine Black, partner in the consumer practice of Kearney, said in emailed comments Friday evening. “In Raleigh, [North Carolina] we visited a wide range of stores (Target, Best Buy, Macy’s, Bass Pro Shop) and while all of them had shopper traffic, none of them had early morning lines, or completely full parking lots or long lines.”

The avoidance of such lines this Black Friday could have contributed to the use of BOPIS, according to Salesforce, which said the service option was trending 20% higher on Black Friday compared to all other days this season.

With e-commerce still strong this year, Sides thinks it can still go head-to-head with in-store shopping as consumers’ preferences settle in after the highs of the pandemic. 

“Folks have gotten used to online and their perception is that you’ll get the same deal in the store and online,” said Sides. “What that says is that the consumer is finding different ways to shop and it’s really about whatever suits them best.”

Winner: Electronics

Digital cameras, smartphones and other higher-priced electronics saw some consumer interest during Thanksgiving and Black Friday. Key electronics retailers like Best Buy have been battling the impact inflation has had on discretionary purchases this year, leading to slumping sales and an increased need for markdowns leading up to the holiday.

“That category was somewhat of a challenge for a while, just because of the purchasing behaviors that happened during the pandemic that a lot of us did not expect necessarily,” said Sides.

Shoppers were drawn in by larger discounts for electronics on Thanksgiving, per Adobe. For Black Friday, the group expected larger discounts on electronics to reach 27%, computers at 18% and televisions at 13%.

Electronics and accessories was one of the most popular categories to shop for globally on Black Friday, according to data from Salesforce, which said the category was up 19% as of Friday evening. Meanwhile, Adobe’s final numbers for Black Friday showed that smart home items and audio equipment saw online sales jump by over 200% compared to the average day in October.

“This is likely driven from consumers holding out for larger deals,” Vivek Pandya, lead analyst with Adobe Digital Insights, told Retail Dive via email. “We are seeing an uptick in digital cameras and smart speakers in the electronics category and expect to see more momentum the closer we get to Cyber Monday, as discounts will reach their strongest levels on that day.”

Loser: Inventory levels

Despite consumer interest in categories with increased inventory levels, inventory might remain high into the near future according to some analysts.

“Simply put, there’s only so many big screen TVs a household can acquire over a period of two-three years. So those retailers who acted on the assumption of continued growth in such categories may have difficulty moving high excess inventory even with deep discounts,” Inna Kuznetsova, CEO of supply chain optimization firm ToolsGroup, said in emailed comments. “Given the number of unknowns in both supply and demand, it may be difficult to project the time of resolution. Yet, by the nature of retail, it is natural to assume that a lot of goods may end up with deep discounters or even in landfills to clear space for new models and new season collections.”

In addition to electronics, toy companies like Hasbro saw inventory issues throughout 2022 heading into the shopping season. In October, the toy giant reported a 31% hit to its operating profit within its consumer products division, in part due to inventory buildup.

Toys sales online during Black Friday were up 285% compared to the average day in October, per Adobe. As for Thanksgiving Day, Salesforce reported toys and learning sales were the third highest performing vertical globally, up 10% year over year.

Sides at Deloitte also predicts inventory woes may continue into the new year for most categories despite the strong sales during Thanksgiving Day and Black Friday. 

When asked if retailers can expect any relief from the challenges they’ve faced throughout 2022 during this shopping season, Sides said it really depends.

“I think the mass stores will do really well. That’s what [consumers] told us about where they plan to shop,” said Sides. “I think there’ll be some relief for some and others will signal just not-so-great times, so it’s gonna be a challenge for sure.”

Winner: Mobile commerce

Mobile commerce was a big hit for shoppers this time around, especially on Thanksgiving when consumers may have wanted to shop more discreetly and casually during family gatherings.

On Thanksgiving, mobile shopping accounted for 55% of online retail sales, an all-time high and an increase of 8.3% year over year, per Adobe. On Black Friday, mobile hit another record, reaching 48% of all online sales compared to 44% in 2021.

“Mobile online spend was likely driven by the desire to make purchases from anywhere,” Pandya said. “It is also reflective of growing trust in smartphone transactions and improvements in mobile online experiences (compared to past years where consumers chose to shop on their computers).”

Loser: Curbside pickup

A look at curbside pickup on Thanksgiving and Black Friday compared to last year shows that consumer sentiment about in-store shopping is a mixed bag.

On Black Friday, curbside pickup was used in 13% of all online orders for retailers that offer the service, according to Adobe. That is a decrease from 21% last year. So far this month, from Nov. 1 to Nov. 24, curbside pickup was used in 19% of all online orders. The analytics group said it expects curbside pickup to peak from Dec. 22 to Dec. 23.

Curbside pickup did perform better on Black Friday and Thanksgiving compared to other shopping days this season so far. Comparing Nov. 19 to Nov. 25 to the week before, curbside was up 54%. 

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