‘Tis the season for holiday shopping and Black Friday deals, and experts from the National Retail Federation are causing a “wallet shift” stir about the state of the American consumer.
“When you look at consumer spending data, consumers are still powering the U.S. economy, they’re still spending. Seventy-percent of GDP is consumer spending. So what we believe we’re seeing is actually just a change in where the consumer spending is, not necessarily a real significant reduction in overall consumer spend,” NRF director of research Mark Mathews told FOX News Digital.
“We’re pretty bullish that we’re going to have a good, solid holiday period, that it looks more like the holidays that we had pre-pandemic,” he continued. “Not this supercharged retail that we saw during the pandemic, but nonetheless, a return to normal trends.”
According to NRF data, consumer spending is expected to reach record levels for the remainder of this year, between $957.3 billion and $966.6 billion which is a 3 to 4% increase from 2022. Each individual consumer is expected to spend nearly $900 on winter holiday shopping, with their research director claiming that spending on loved ones is a priority.
TARGET REPORTEDLY TESTING 10-ITEM LIMIT FOR SELF CHECKOUT
“Our most recent numbers for the Thanksgiving-Black Friday weekend show that consumers are willing to spend. So we have a pretty robust feeling going into the holidays that consumers are going to reach into their pockets,” Mathews said.
“The U.S. consumer has $3 trillion more in their bank accounts than they did pre-pandemic, and every single category of household income is up,” he continued. “The sense is that they’re pockets of the economy and pockets of the consumer that are absolutely struggling. But when you look at it on an aggregate basis, the consumer still has firepower to continue to spend.”
While shoppers are reportedly ready to dip into their pocketbooks for the 2023 holiday season, the retail expert noted there are still “major” concerns swirling around the sector including sales volume, theft, interest rates and credit card delinquencies.
“What we’re really seeing in terms of any weakness out there is being driven honestly in part by the fact that in retail we are seeing disinflationary, if not deflationary, prices over the last few months,” Mathews said.
“Three-percent inflation, we have to understand, is an aggregated number across everything. When you look at, actually, individual goods, if you look at mobile phones, for example, down 12% year-over-year, televisions down 10%,” he explained. “We’re also seeing home furnishings down both month-over-month and year-over-year. So there are sectors where we see real weakness in price. And that, to some extent, is driving the reduction in sales that we’re seeing.”
Additionally, a survey from Clever recently unveiled that 61% of Americans have credit card debt today, owing an average of $5,875. NRF’s resident data expert claimed while debt levels are “incredibly high,” service debt is manageable and has been rising.
“That’s your ability to pay the interest on your debt. And that has been rising, but it’s in line with where we were pre-pandemic. So, even though gross debt levels are rising, and credit card debt levels are rising, we are still in a position because of interest rates. Much of this debt was acquired during a low-interest rate period,” he explained. “Consumers still have the ability to pay off that debt.”
“There’s a lot of different factors that sort of interplay against each other. I’m not diminishing the concerns of a crisis of credit card debt,” Mathews added, “but I do think that we are not yet in a position where we see that as a threat to performance.”
One area where retail experts remain “incredibly concerned” is retail theft and loss. Mathews spotlighted that it isn’t only industry giants seeing store closures, but small businesses as well.
“We hear about the big chains and their problems. Oftentimes, we forget that the retail industry is an industry that is made up of 98% of small businesses. That is the backbone of our economy. And sometimes those get forgotten, and they know they’re suffering as well,” the NRF director of research said.
Large-scale organized theft operations don’t happen in every market, but Mathews warned that criminals know their limits when stealing and reselling products.
“They need to steal stuff that is easy to move, easy to sell, and that has high resale value. So there are certain types of products that they’re targeting, certain types of stores that they’re targeting and certain cities that they’re targeting because they know that some states have a $1,000 threshold, so they can steal up to $990,” he said.
“There are a lot of different policy measures that we’re working on, a lot of effort working with people on Capitol Hill to make sure that is something that’s addressed,” Mathews continued, “because it’s far from ideal for a retailer to have to put half of their products behind plastic barriers. Only does that make it less convenient for the consumer.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
In preparation for Black Friday shopping, Mathews also shut down any speculation that there’s an excess of inventory at big-box retailers ahead of the busy season.
“I think [the media is] just concerned that we’re seeing a bit of a slowdown, and that means that there’s going to be too much inventory, which means that retailers are going to have to be very promotional and reduce prices. None of us have crystal balls. We’ll know better in January.”