The recent "consumption performance" of American online shoppers has broken predictions. In the five days following the start of Thanksgiving this year, consumer online sales reached a record breaking $38 billion.
According to online consumer data tracking platform Adobe, online spending on Black Friday in the United States reached a record high of $9.8 billion this year, a year-on-year increase of 7.5%; Online spending on Monday (November 27th) reached $12.4 billion, making it the largest online shopping day in US history.
The performance of this year's shopping frenzy has increased by nearly 8% compared to last year. In addition, data provided by US data analytics service provider Placer shows that compared to 2022, there has been a greater increase in visits to shopping centers and department stores, while the year-on-year growth in total credit card expenses has slightly slowed down.
The resilience of American consumers has surprised forecasters as recent economic confidence surveys have been negative. The strong spending in the retail industry also helped the United States achieve a 5.2% surge in gross domestic product (GDP) in the third quarter.
Expenditure data still needs to be observed
Brooke Masters, deputy editor in chief of the Business column of the Financial Times, believes that as Christmas approaches, the economic situation remains uncertain, the labor market is slowing down, mortgage interest rates remain high, and resuming student loan payments after the pandemic pause may curb spending. However, cooling inflation and falling oil prices may give shoppers more money to use.
Masters believes that companies have a responsibility to continue to be cautious and not overly interpret the record breaking expenses of the past few days, especially under the promotion of the "Black Five Net One" campaign.
The sharp increase in commodity spending after the pandemic last year was a warning to many companies, which led to difficulties. At that time, Amazon mistook one-time growth for long-term changes, leaving behind excess employees and inventory, resulting in high operating costs.
Therefore, for this consumer frenzy, retail executives must study more carefully what factors drove last weekend's online consumption boom.
It is reported that part of the reason for this growth is the rapid popularity of shopping applications and websites on mobile devices, making it more convenient for consumers to shop online.
Another driving factor is the rapid growth of the Buy Later (BNPL) program, which allows shoppers to defer payments for several months in an interest free manner. As of November ending on Monday, BNPL expenditure increased by 17% year-on-year to $8.3 billion.
Of course, according to Adobe's data, the biggest driving force behind holiday shopping sprees so far is promotional discounts, with some categories such as toys and electronics averaging up to 30%.
Consumers are more price sensitive
Last year, customers suffering from shortages and transportation problems due to the COVID-19 epidemic began to carry out holiday shopping gradually in late October. This year, shoppers have been waiting longer, waiting for holiday promotions to start cutting their hands.
"Customers are very price sensitive and know when they can buy something more cost-effective," said Vivek Pandya, Chief Analyst at Adobe
Masters also pointed out that due to people's habit of responding to discounted products, online retailers now face a risk: customers who are tired of high prices refuse to pay the full price. However, this psychology of consumers is no longer surprising in physical stores.
Masters warns that if the same sentiment spreads to the e-commerce industry, companies may fall into a serious holiday hangover.