Retailers are predicting a slight decline in Black Friday/Cyber Monday sales, an early indication of holiday-season spending and Q4 sales. Total sales in the US alone are expected to exceed $1 trillion, with growth between 3.7% and 4.2%, a bit beneath last year’s 4.8% growth. However, individual shoppers are expected to spend 4% less.
Dive Research found that 70% of American consumers cited the rising cost of living as their reason for cutting back this holiday season. Groceries, in particular, have 57% of shoppers reconsidering their gift purchases. Consumers spend when they believe it will be more expensive tomorrow, leading 88% of respondents to say they will participate in Black Friday/Cyber Monday, though 12% admit Cyber Week is a marketing gimmick for most items.
Deloitte research also found that 82% of respondents plan to shop this week, up from 79% in 2024. The average person is expected to spend $622, down 4% from 2024. Yet, two-thirds of those surveyed (64%) admitted they plan to use financing options to complete their purchases at a time when household debt is at a record high in America. Around 69% of respondents said they will spend less due to the increased cost of living, while 43% will pull back on spending due to financial constraints. Deloitte also found that those who plan to use financial options will spend 12% more than those paying outright.
Most shoppers plan to rack up their credit cards without setting foot in a store. Online shopping has dominated the holiday sales seasons, and a number of studies show that consumers are more likely to spend more when shopping online. Drive’s study found that 81% of consumers will use AI this year to find the best deals and compare past prices. Over 30% of consumers will ask AI to compile gift options for specific relatives and friends. Not so coincidentally, the majority of AI platforms have introduced e-commerce features over the past year. Walmart, Alibaba, and Amazon each offer company-provided AI tools to assist shoppers. ChatGPT implemented a new feature this year that combines chatting with consumerism. Mention a need, and the system will conveniently provide you with links to a list of products. Marketing to the masses has never been easier.
Consumers will continue to consume, albeit slowly sinking further into debt and exacerbating the private debt crisis.