2023 Holiday Consumer Spending May Defy Expectations Yet Again

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If any city was going to have a dismal Black Friday turnout, it should’ve been Denver, CO. Two inches of snow overnight on Thanksgiving leading to highs in the low 20’s F on Friday. Anyone looking for an excuse to avoid the mall had one, all wrapped up in a snow-white bow.

Did that stop anyone? Apparently not. In fact, it may have created more traffic for enclosed malls at the expense of the lifestyle centers and strip malls. My own trip to Park Meadows Mall in Lonetree, CO meant parking in a strip mall’s parking lot, clambering over snow-covered hills, taking our lives in our hands by trying to cross the mall’s ring road, packed with traffic, before finally trooping inside.

My family came at noon and while we were not the first to make that trek, we did have an easy time parking. When we left at 3pm, not only was the strip mall lot full, but someone had actually driven over the hillside from the ring road to get to that lot. People had moved on to the next lot out, which required crossing six lanes of traffic and walking up a hill just to get to the lot we parked in.

Long Lines of Retail Shoppers

A global pandemic has fuzzed my memory somewhat, but I don’t think I’ve ever seen the mall that full. Lines were everywhere – we didn’t even bother trying to get into the food court, and there were people sitting on the floor in front of shop windows eating their Chipotle and their Chick-Fil-A. There was a two-part line to get into the LEGO store, because if they didn’t break it up, the line would either block the aisles or block the entrances to other stores. It was at least 20 people long.

There were lines to get out of stores, too. And this, I anticipated. While the labor crunch for retail isn’t what it was a few years ago, it’s still real – it’s just self-imposed. Retailers are trying to balance higher wages against labor budgets, and the net effect is fewer labor hours for stores. Which means fewer staff at the registers.

And the age of store tills – another sore point for retailers, first challenged by the tech supply chain, now challenged to avoid major hardware upgrades to preserve capital – clearly showed retail winners and losers. Old registers? Long lines. Newer registers, mobile devices? No lines at all. Forever 21 had the longest line I’ve ever seen, one that wrapped around almost the entirety of the store. There were at least 80 people in that line. There will definitely be retailers who will find that their store sales on Black Friday were limited not by the number of shoppers coming through the door but by the number of transactions they could process, a function of both hardware and staffing.

Uneven Discounts and Department Store Contrasts

Everyone in the place had shopping bags and pretty much every retailer was represented. Higher-end retailers were calmer (with the exception of the Apple Store), but they also had few price discounts to be seen – they were not feeling desperate, despite the overall slowdown in luxury spending reported in Q3 earnings results.

Macy’s and JCPenney had the steepest discounts on offer, with a lot of sale toppers offering 50% off or more. The Macy’s store at Park Meadows had a clearance section that was surprisingly large, not a good sign at this time of year. The store was so stuffed with racks and last minute repositioning of sections that it was almost unshoppable. It really seemed like the store was in a race to the bottom with JCPenney. Dillard’s and Nordstrom
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, the other two anchor stores in the mall, were no less busy but had wide, clear aisles and much more conservative discounts.

JCPenney’s cosmetics store-within-a-store was empty, and a confusing set of brands that seems to reflect continued lack of direction since losing the Sephora partnership. Meanwhile, the Sephora store seemed perilously close to violating occupancy safety rules and might have benefited from the LEGO approach of metering the entrance. And it seemed like in the balance of mall power, the small stores in between the anchors are winning. While several brands occupying the small stores also had product in the department stores, the small stores were cleaner, better stocked, and better staffed.

It’s Not About Stores vs. Online, It’s About Consumer Spending

All that said about one mall in one suburb of one city, when you tie it with larger results like Adobe’s initial take on Black Friday – a new online record expected, online sales up over 7% year over year (which definitely beats inflation) – it starts to suggest that consumers are coming out big for holiday 2023. That may peter out fast, or stay strong through the end of the year. But it certainly seems to suggest that the positive forces are beating out the negative ones that could weigh down consumer spending.

We used to watch online vs. store spending to understand which would win. This year feels more like watching both to understand whether retail will win overall, because we know more certainly than ever that the lines between online and stores are blurred. Online success comes with a different set of costs than stores, but it’s not about driving consumers to one or the other – it’s more about managing both to optimize overall profitability. And none of it matters if consumers are still defying expectations and shopping in both places, sometimes at the same time.

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