Black Friday Boosts Online Shopping Amidst Sluggish Retail Performance in the USA

After COVID-19 subsided, business and tourism exchanges became more frequent, U.S. consumer confidence gradually recovered, and consumer spending increased significantly. However, retail sales began to decline in October. On the contrary, the online shopping market has grown significantly due to the Black Friday shopping trend.

TAIPEI, TAIWAN (Merxwire) – Starting from the second half of 2022, after the COVID-19 epidemic subsides, business and tourism exchanges become more frequent. Even if inflation continues, U.S. consumer confidence gradually recovers and spending increases significantly. U.S. gross domestic product (GDP) grew by 4.9% in the third quarter of this year. However, retail sales began to decline in October and consumption intensity slowed down. Based on the trend, economists predict that investment and savings will decline at the end of the year, by as much as 15% to 20%.

The U.S. financial well-being index compiled by the well-known accounting firm Qinye Uoxin continues to decline, reflecting consumers’ negative views on future financial security and the soundness of their finances. The Food Frugality Index continues to rise, indicating that people tend to save money on groceries, choosing to buy cheaper food, while reducing the quantity of purchases, or even abandoning non-essential items and only buying necessities.

Data released by the United States Census Bureau shows that retail sales began to decline starting in the fourth quarter, and the GDP growth rate in Q4 this year is estimated to be between 3% and 4%. Reasons for the weakening in consumer spending include decelerating employment growth, inflation, rising interest rates, and reduced savings due to repaying student loans. Bank of America’s analysis team found that as many as 86% of retailers tend to be conservative in their profit assessments for the holiday season at the end of the year.

Despite the pessimistic outlook for the retail industry, the online shopping surge during the just-concluded “Black Friday” exceeded expectations and grew upwards. Consumer spending increased from Thanksgiving last week to this Monday. Consumer spending increased 5.5% on Thanksgiving Day to $5.6 billion. Black Friday sales grew 7.5% to $9.8 billion. The last day of this wave of sales, November 27, also known as “Cyber ​​Monday”, also exceeded the estimated US$12 billion, making a record of US$12.4 billion.

Data shows that the period between 10 and 11 o’clock every night is the period with the strongest consumption power. The day with the highest consumption amount falls on the last day, setting a record for the highest consumption expenditure. Total consumer spending from Thanksgiving to Cyber ​​Monday reached $38.1 billion, $900 million higher than the forecast of $37.2 billion. Compared with physical retail stores, it can be seen that online e-commerce has become the biggest beneficiary of this shopping wave.

Experts analyze that the main reason for the boom in online shopping is that many businesses have adopted the “buy now, pay later” micro-credit function and flexible payment methods, which have increased the amount of consumption. Coupled with the impact of high inflation in the past two years, consumers will choose more cost-effective consumption methods, so they tend to shop on online platforms with more discounts. These e-commerce operators will invest the saved manpower and store costs into website construction, allowing consumers to easily compare prices and make payments, enjoy more discounts, and have products delivered directly to their homes.

Therefore, more and more strategic consumers choose to spend at the moment when the discount is the most. The most popular products are electronic products such as smartphones, headphones, smartwatches, and laptops. Another hot-selling category is toys, including Lego, Nintendo Switch game consoles, Barbie dolls, etc. Maximizing discounts, improving e-commerce services and flexible payment mechanisms will keep the online shopping market hot. Experts estimate that total online shopping sales in November and December will reach US$228 billion, an increase of approximately 4.8% from 2022.