What strong Black Friday retail sales mean for holiday spending

Instead of dashing to the mall after Thanksgiving dinner or lining up outside stores for doorbuster deals on Black Friday morning, more Americans are filling up shopping carts from their couches.

Online shopping still drives just a fraction of overall holiday spending, even after the cooped-up years of the pandemic — giving it plenty of room to grow. About 1 in 5 retail dollars are spent online, according to Adobe Analytics. Only about 30% of overall holiday sales last year took place online, through apps or in other locations that aren’t physical stores, according to the NRF.

Consumers spent $109.3 billion online from Nov. 1 through Cyber Monday this year, according to Adobe Analytics. That’s a 7.3% jump compared with the same period last year.

It’s an even sharper jump from pre-pandemic in 2019. Consumers spent $81.5 billion online during the stretch from Nov. 1 through Cyber Monday that year. The period this year had a few extra days since Thanksgiving was later in 2019 than in 2023, but illustrates the bigger embrace of e-commerce.

Adobe’s data covers more than 1 trillion visits to U.S. retail websites, 100 million unique items and 18 total product categories.

The desire for deals is an early and clear theme of the season.

After more than a year of paying higher prices for nearly everything including milk, gas and housing, U.S. shoppers have shown that a compelling price cut is one of the best motivators.

Black Friday and Cyber Monday have become synonymous with deep discounts, which may explain the outsized shopper turnout and online spending.

On Cyber Monday, for instance, consumers saw discounts peak at 31% for electronics, 27% for toys, 23% on apparel and 21% on furniture, according to Adobe.

Those price cuts in electronics, apparel and furniture were higher than Cyber Monday a year ago. Toys, on the other hand, had lower discounting levels than the last Cyber Monday.

Scott Wren, senior global market strategist at Wells Fargo, said it’s a mistake for investors to extrapolate that heightened Black Friday weekend spending means that the American consumer is healthy. Instead, he described it as the “last hurrah” before a recession that Wells Fargo predicts will take place in the first half of 2024.

He said higher credit card balances, increased costs of borrowing and the risk that the U.S. Federal Reserve may keep raising interest rates to fight inflation could spur a downturn.

“People are just about tapped out, but [with] the holiday season, people are willing to even further extend themselves,” he said.

Reality may also hit as consumers must pay off those holiday purchases.

Americans are financing purchases in new ways, along with swiping credit and debit cards. Use of buy now, pay later hit an all-time high on Cyber Monday, according to Adobe. It contributed $940 million in online spend, a nearly 43% jump year over year. Shoppers who used the payment option also put more items in their carts, as the number of items purchased rose 11% year over year.

In many parts of the country, shoppers got away with postponing purchases of sweaters, hats, jackets and other cold-weather gear thanks to an unseasonably warm fall.

Yet Black Friday weekend brought chillier temperatures in major cities such as New York City — the kind of cold snap that retailers root for.

Over the past two months, companies including Levi Strauss and Macy’s spoke about the challenge of milder weather.

Macy’s CEO-elect Tony Spring told investors on an earnings call in mid-November that “the weather was a little warmer than we would have liked,” but stores adapted with merchandise that could transition from season to season.