inflation? recession? Starting with Black Friday, America plans to spend

Pedestrians view holiday windows at a Macy’s Inc. store. The main one in the Herald Square area in New York, United States, on Thursday, December 2, 2021.

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Americans aren’t planning big holiday spending cuts this year, starting with Black Friday, though inflation fears and the risk of a recession are top concerns among the majority of consumers, according to an annual survey by CNBC and SurveyMonkey before their first big shopping spree. Weekends of high season.

Two-thirds of Americans (67%) worry about inflation making it difficult for them to buy the things they want. More than half (69%) fear that the recession will limit their ability to buy. But projected spending cuts among consumers are up slightly from last year — 39% versus 36% — with a majority of Americans saying they expect to spend the same amount (44%) or more (14%) this year, according to the annual CNBC | SurveyMonkey Small Business on Saturday.

“People are very much in agreement with how much they expect to spend on holiday shopping,” said Laura Ryonsky, Momentive’s senior director of scientific research. “It’s going to cost more and you have to accept that there is no secret way around this high inflation,” she said. But she warned there was still a risk that consumer behavior could change once shoppers evaluate prices. “The intention may be different from the outcome. They’re going to see some sticker shock there and they’re going to find that their budget won’t go as far as in previous years,” Wronski said.

The survey results reveal a consumer divide in the economy, with spending concerns more prevalent at lower income levels.

78% of households with incomes under $50,000 are concerned about their spending power amid inflation this holiday season, a number that drops to 56% for household incomes of $100,000 or more.

Economic concerns are relatively high among younger Americans as well, with 73% of those ages 18 to 34 worried about their ability to buy whatever they want because of inflation, the highest of any age group in the survey.

The data on inflation matches concerns in last year’s survey about the then-flailing supply chain.

“Inflation is playing the role of the supply chain odyssey this year,” Wronsky said.

The SurveyMonkey survey was conducted online November 9-13, 2022 among a national sample of 3,549 adults.

The National Retail Federation earlier this week predicted record sales for the first holiday shopping weekend, which begins on Black Friday, and predicted eight million more shoppers (166 million) this year than last year, the highest level since 2017.

Some recent earnings reports from retailers show consumer resilience. Best Buy reported third-quarter results that beat Wall Street expectations and said it expects holiday spending to look more similar to historical holiday periods, with customer shopping activity concentrated in the week of Black Friday, Cyber ​​Monday, and the preceding two weeks through Dec. 25. Fitch said this week it was “cautiously optimistic” about holiday sales.

But concerns about younger consumers have also been presented in recent retail sales reports. Urban Outfitters CEO Richard Hine said on its earnings call earlier this week that the company has raised prices “too much” in its stores — it has a younger consumer base that is more affected by inflation. The CEO of American Eagle Outfitters said on its earnings call to anticipate a “highly promotional holiday season”.

Retailers are expected to offer some pretty big discounts for moving stock, starting this Black Friday.

Consumers are becoming more selective in how they spend

“Inflation and recession are related and both are very high on consumers’ minds, but the habits are sticking,” Wronsky said. “This is the time of year when you’re expected to buy and spend more than you should. … That’s the main takeaway. They’re not making big changes despite the fact that they have recession fears and we’re in a hyperinflationary environment.”

CNBC poll found | SurveyMonkey notes that with many consumer spending habits in line with the past, sharp changes in shopping patterns caused by the pandemic, such as e-commerce versus in-store, are settling into the new normal.

Here are some key findings from this year’s survey.

Black Friday is still the number one shopping holiday

The survey has consistently found that the hype around shopping holidays is often higher than the actual excitement among consumers. More than half (55%) of respondents don’t plan to go shopping on Black Friday, Small Business Saturday, or Cyber ​​Monday. Last year, that number was 52%.

But Black Friday remains the number one shopping holiday Americans say they will spend on. One in five (21%) are “more excited” to go shopping on Black Friday, nearly twice as many consumers plan to shop online on Monday (12%). Small Business Saturday is a distant third, at 7%.

For small businesses, the concept of a holiday shopping day is difficult to convey because there are so many different types of businesses that fit into the Main Street umbrella, Wronski noted, from local bookstores to restaurants and many other types of retail, and there’s also less coordination of possible discounts than in the likes of large retailers.

There has been a sharp decline over the past four years in holiday shoppers who plan to sponsor a small business Saturday for a small business, dropping from 44% in 2018 to 28% this year.

Amazon and small business spending on Saturday

The gains in e-commerce may have contributed to a lasting decline in small business shopping interest on Saturday, which hit a four-year low. But it also contributed to an increase in online small business purchases, as the percentage of Americans who plan to buy online from a small business has doubled this year over the past four years, from 9% to 18%, while those who say they would like a small business have fallen in person by 10% (from 58% vs. 48%). During the pandemic peak year of 2020, one-fifth (20%) of consumers who plan to spend on small business on Saturday said they would make purchases online, and this year’s results point to lasting gains for high street e-commerce.

The connection between the Amazon threat and the Main Street conflicts, meanwhile, is not clear in the survey results. Two-thirds of American adults (66%) say they have Amazon Prime subscriptions, almost unchanged from a year ago, but are more likely to say they’ll spend Saturdays for small businesses (33%). That’s nearly twice as many consumers who don’t subscribe to Amazon Prime (18%) and plan to shop at Small Business on Saturday.

“We always hear about the Amazon threat, but we’ve never seen it happen in this way,” Wronsky said. “It shows up in some of the data in other ways, and Amazon is moving away from the business, but at the same time people who buy from Amazon are also buying from smaller businesses at higher rates,” she said, adding that one factor is Amazon’s correlation. Prime subscription and higher wealth levels.

E-commerce gains have slowed but are here to stay

This has been a tough year for tech companies that are betting that the acceleration of gains made during the pandemic will continue as Americans’ behavior changes dramatically. This is not the case, but the gains made by e-commerce seem to be settling into a permanent state.

More than half of shoppers (51%) say they prefer to shop in person during the holidays, compared to those who prefer to shop online (47%). These numbers are unchanged from last year, but they represent a significant shift from pre-pandemic years, according to SurveyMonkey. In 2018, 61% of holiday shoppers said they preferred to buy in person, while 37% said they preferred to buy online.

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