Inflation could ruin Black Friday for retailers — but it’s good news for you
Due to higher inflation (opens in new tab) and tightening budgets, holiday shoppers are buying fewer gifts than they did last year. In fact, projected holiday sales are only expected to be up 6% to 8% (opens in new tab) from last year, a decline when taking into account the 8.2% rise in inflation.
This lack of demand has been a problem for many retailers, a major shift from last year. While previously stores struggled to keep items in stock, they’re now sitting on an excess of inventory. Considering Americans are already spending less on non-essential items like electronics and clothing, this has resulted in a severe imbalance of products. More and more retailers are facing diminished profits and lack of storage space as new products keep coming in, but not out. Target lost more than 34% (opens in new tab) of its stock due to inventory issues, while Nike’s fell 13% in one day back in September for similar reasons.
However, while this excess inventory has been challenging for retailers, it’s good news for consumers. To clear out warehouses, retailers will be aggressively liquidating products, which means bigger and better deals this holiday season. Retailers will have to heavily discount items in order to keep up with this decline in demand. Computers discounted will be as high as 32%, electronics 27% and toys 22%, says USAToday (opens in new tab), and many deals are coming way ahead of Black Friday. On November 7th, Walmart will kick off its Black Friday Deals for Days, with four separate events starting each Monday in November. Everything from electronics to apparel to toys will be heavily discounted, and Walmart+ members will have first access to these deals.
Plus, off-price retailers will be acquiring better branded merchandise as retailers sell inventory to them, so If you like to shop at TJ Maxx, expect to see an increase in quality products and brands sold in-store.
Overall this is a win for holiday shoppers, especially as many have been finding it harder than ever to save for the holiday season (opens in new tab). As retailers struggle to liquidate an excess of inventory, expect big discounts this holiday season. Black Friday deals are coming early this year, giving you more time to shop around for the best sales.