‘Your budget is your hot trend’
Retailers attempt to lure those price-weary with deep discounts
Black Friday is fast approaching, and advertisements for deep discounts have been posted at several Water Tower Place retailers for days.
The American Girl store advertised a Black Friday early access sale at 20% off. Forever 21 was up to 70% off, American Eagle was up to 60% off, Hollister was 25% to 40% off and Aeropostale advertised price cuts of between 50% and 70% off. (For most deals, exclusions applied.)
But despite the price cuts, not everyone who visited the Michigan Avenue mall in recent days was shopping. One woman from the suburbs told the Tribune that because of high prices, the holidays would feature a lot more “window-shopping” this year.
Marchae Miller, 41, and Mary Hainds, 38, of Uptown, were at Water Tower Place for an interactive Harry Potter exhibit inside the mall. But Miller, a confident crafter, said she planned to make most of the couple’s holiday gifts this year, such as a Marvel-themed crochet blanket she’s planning to give her brother for Christmas.
“For two years, everything was so disrupted because of COVID,” Miller said. “Now everything is back open, and you still can’t do anything because everything is so expensive.”
Though the pace of inflation is cooling, consumer prices were still up 7.7% in October when compared with the same time last year, according to the Bureau of Labor Statistics. Major retailers have responded to inflation by offering deep price cuts and holiday deals that started as early as October.
With Americans contending with higher prices for everything from rent to groceries, retailers are acutely aware that consumers
have less money to spend than they did last year. The National Retail Federation predicts holiday retail spending will grow about as much as inflation, or between 6% and 8%, this year, topping out somewhere between $942.6 billion and $960.4 billion. Deloitte forecasts smaller holiday retail sales growth of between 4% and 6%.
“Dealing with the 40-year record high inflation is definitely eroding our core customer spending power,” The Children’s Place Chief Executive Officer Jane Elfers said in a November earnings call. “Our customer is in a position now where they’re going to have to make choices between discretionary spend and essential spend. Food’s up, gas is up.”
Nearly 60% of people surveyed by Chicago-based research firm Numerator said they were worried about being able to afford holiday gifts. And 93% said they planned to adjust their shopping habits to afford
rising prices, such as by seeking out additional sales or buying gifts for fewer people.
“Consumers are feeling increasing levels of stress, driven by persistently high inflation, rapidly rising interest rates and an elevated sense of uncertainty about their economic prospects,” Target CEO Brian Cornell told investors in an earnings call this month.
Like many other retailers, the company has responded by offering Black Friday deals early. At the earnings call in early November, Chief Growth Officer Christina Hennington said Target was already offering some of its best prices of the season. The company is also promising customers a price match if the cost of an item they purchase from Target goes down later in the season, up until Christmas Eve.
“People have asked me, ‘What’s the trend, what’s the hot trend for the holiday season?’ ” said Gabriella Santaniello, founder of the retail research firm A Line
Partners. “Your budget is your hot trend.”
Deals start earlier than ever
According to an annual holiday shopping survey by Deloitte, more than 30% of Chicago-area respondents said they planned to start shopping for the holidays earlier this year, with nearly a quarter of respondents saying they planned to spend their holiday budgets by the end of October.
There are two reasons for the shift to earlier holiday discounts, said Neil Saunders, managing director at GlobalData, a retail consultancy. One is that most retailers have too much stock, in part because they over-ordered inventory in an attempt to avoid a repeat of the shortages that plagued last year’s season. The other is that price-conscious shoppers want to spread out their holiday spending rather than do it all at once, Saunders said.
Still, nearly 70% of people surveyed by the National Retail Federation said they planned to shop over the Thanksgiving weekend, with the same percentage of those shoppers saying they planned to shop on Black Friday. Thirty-eight percent of holiday weekend shoppers said they planned to shop on Cyber Monday.
The best deals will still start on Black Friday — and could continue in the weeks that follow, especially if sales on the day itself aren’t strong, Saunders said.
“Retailers could look at their inventory position after Black Friday and say you know what, we’ve got a lot of stuff we need to sell down,” he said. “They might therefore discount much more deeply in those weeks afterwards.”
Discounts are not likely to be significantly better on Black Friday than on Cyber Monday or the other way around, Santaniello said. “If a retailer runs 40% off on Black Friday, they’ll probably be 40% off on Monday,” she said.
Santaniello also doesn’t expect shoppers to receive much financial benefit from doing their Black Friday shopping in stores versus online, although they could save money on shipping if the retailer isn’t offering it for free, she said.
The NRF expects to see a small increase in the number of Black Friday shoppers in stores this year, with 67% of those shopping that day saying they planned to do so in person, up from 64% last year.
Holiday pedestrian traffic downtown could meet or exceed 2019 levels this year, said Kiana DiStasi, chief marketing and communications officer for the Chicago Loop Alliance. As of last week, pedestrian traffic in the Loop was up 28% over the same time last year, according to the Loop Alliance.
Chicago-area shoppers plan to spend just over 60% of their holiday budgets online, according to Deloitte.
Most stores close on Thanksgiving
The days of lining up to shop before the Thanksgiving leftovers are cold is mostly over, experts said.
“Some of that’s economic; it just doesn’t make sense,” Saunders said. “But some of it’s also because they recognize their staff need a day off.”
In the Chicago area, Chicago Premium Outlets, Water Tower Place, Oakbrook Center, Woodfield Mall, Northbrook Court, Orland Square and Gurnee Mills will all be closed on Thursday.
The malls will start to open as early as 6 a.m. on Black Friday.
Other major retailers like Kohl’s, Target, Macy’s, Walmart, J.C. Penney and Best Buy will be closed on Thanksgiving but open as early as 5 a.m. or 6 a.m. on Black Friday.