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  • Writer's pictureAndre Watson

Brick-and-Mortar Retail Anticipates Holiday Shopping Boost

Analysts Project Sales Gains With Black Friday Help, But Some Warn of Consumer Fatigue

Some 69% of Americans, or 114.9 million people, plan to shop on Black Friday this week, according to the National Retail Federation. (Getty Images)

Black Friday, the traditional beginning of the holiday shopping season, may have evolved, but it remains a crucial sales day, especially this year when retailers’ profit margins are being squeezed as the result of high inflation.

It also represents the latest test for brick-and-mortar retail, a property sector battered by the COVID-19 pandemic that is now producing more store openings than closings around the country.

For many years, the day after Thanksgiving marked a revenue peak for retailers as the season kicked off. Stores would offer enticing "doorbuster" deals that would prompt eager shoppers to wait in line outside at the crack of dawn before packing into malls and shopping centers. In fact, the term Black Friday refers to the idea that some retailers operated at a financial loss, or “in the red,” until the day after Thanksgiving, when big sales permitted them to turn a profit, or put them “in the black.”

But over time, and exacerbated by the pandemic in 2020 and the corresponding rise of e-commerce, holiday retail sales began to spread out and be less concentrated on the one day. Consumers have increasingly started their holiday shopping before Thanksgiving, throughout November and even in October, a phenomenon that was fully in play this year.

This year, Black Friday could be a bellwether for America's desire to spend this holiday season.

Thanksgiving weekend is anticipated to draw a record number of shoppers, and sales for the overall holiday season are forecast to rise, according to the National Retail Federation.

Consumers are expected to keep spending despite the economic headwinds of record inflation and potential recession, although many are trading down when it comes to some merchandise and the places where they pick up items such as groceries, according to some analysts.

“I think Black Friday is still on the calendar as the official start of the retail season ... for the Christmas holiday season," Naveen Jaggi, JLL's president of retail advisory services, told CoStar News.

Top Day To Shop

Ethan Chernofsky, vice resident of marketing at, is predicting that "the 2022 iteration of Black Friday" will be "something in between 2019 and 2021 — better than ‘21 but not necessarily as high as 2019.” It could even outpace last year if no supply chain snafus or COVID variants interrupt the season as they did in 2021, Chernofsky told CoStar News.

An estimated 166.3 million people are planning to shop from Thanksgiving Day through Cyber Monday, according to an annual survey released last week by and Prosper Insights & Analytics. That's almost 8 million more people than last year and the highest estimate since the National Retail Federation began tracking that data in 2017.

Black Friday continues to be the most popular day to shop, with 69%, or 114.9 million, planning to shop then, followed by 38%, or 63.9 million, on Cyber Monday, according to the survey. Of the 114.9 million Black Friday shoppers, 67% say they expect to head to stores, up from 64% in 2021. That reflects consumer behavior shifting over the past year, with more shoppers seeking out brick-and-mortar retail and limiting their online shopping.

The top reasons consumers plan to shop are because the deals are too good to pass up, polling at 59%; because of tradition, at 27%; and because it is something to do over the holiday, at 22%.

“While there is much speculation about inflation’s impact on consumer behavior, our data tells us that this Thanksgiving holiday weekend will see robust store traffic with a record number of shoppers taking advantage of value pricing,” National Retail Federation President and CEO Matthew Shay said in a statement. “We are optimistic that retail sales will remain strong in the weeks ahead, and retailers are ready to meet consumers however they want to shop with great products at prices they want to pay.”

Recession Talk Hasn’t Quelled Buying

And despite current economic pressures, nearly one-third of U.S. consumers expect to spend more money on Black Friday and Cyber Monday in 2022 than in previous years, according to Credit Summit, a website offering financial advice to help individuals get out of debt. The National Retail Federation earlier this month forecast that holiday retail sales during November and December will rise between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion. Last year’s holiday sales increased 13.5% over 2020 and totaled $889.3 billion, breaking previous records. Holiday retail sales have averaged an increase of 4.9% over the past 10 years, according to the federation.

This continued growth in retail spending shows how strong consumer demand remains despite macroeconomic woes, according to Jaggi.

“To me, in light of the fact that we’ve been dealing with recessionary talk for the better part of almost three quarters now, that’s quire remarkable, which goes to show one thing: The U.S. consumer time and time again shows they’re massively resilient and will continue to spend," Jaggi said. "They may shift spending, but they continue to spend."

Others are warning that consumers are starting to exhibit "fatigue" when it comes to opening their wallets, and they expect that to affect Black Friday and holiday sales.

Some naysayers also point out that the National Retail Federation's sales forecast aren't adjusted for inflation, so the projected single-digit sales growth really just represents flat results, with no increase in unit sales. But Brandon Svec, national director of U.S. retail analytics for CoStar Group, said he views the glass as half full, with retail revenue moving at an upward trajectory that surpasses what was originally expected before the pandemic even struck.

“We’ve gotten into such an explosion and lift coming out of the pandemic that just holding the line is good enough," Svec said in an interview with CoStar News. "We can’t do it forever. We can’t see no real growth forever. But frankly, if we can just hold the line against inflation and not see actual demand destruction, we can do that for another year or so and still kind of be in line with where we would have expected to be from a demand perspective.”

Macy's CEO Jeff Gennette said last week the Herald Square flagship in New York is having a very strong year, but the retailer is still waiting for downtown office workers to return and boost sales. (iStock)

Store Debuts Surpass Closings

Last week, a group of retailers that included Target, Macy's and Kohl's reported their earnings, and several saw a slowdown or dip in their sales and profits, resulting in them downgrading their full-year forecasts. For the final quarter, retailers have also said they plan to do more discounting because of excess inventory, something that didn't happen last year because of supply chain backups. Those sales this holiday are likely to eat into company profits.

This holiday season will cap a year when store openings have surpassed store closings. U.S. retailers have so far announced 2,314 store closures and 4,859 store openings for the year, according to Coresight Research. The biggest store closing announcement so far this year came earlier this month, when retailer Sally Beauty said it would close 350 stores by the end of the year, in addition to the 90 it already shuttered.

A lot of retailers have expansion plans, and several retail analysts said no one is dramatically pulling back on those initiatives.

“As of yet, we’ve seen some trending of announced openings from retailers that were expecting to open 75 to 80 stores this year, and now all of a sudden it’s 65 to 70,” Svec said.

“But those [postponements] have solely been on the back of construction delays and supply chain issues, getting critical components to finish jobs [and] finish build-outs, nothing from a macroeconomic consumer weakness.”

Jaggi reported the same.

“Not one retailer has told me that they’re going to actively slow their store count down,” he said. “On the opposite, where they’re able to get their [heating, ventilation and air-conditioning] systems and get their build-out costs accurately budgeted, they want to get their stores opened sooner not later.”

Store Rent Increase

Retail rents are up 4.2% year over year, "actually sitting near their greatest year-over-year increase in over a decade, since before the great financial crisis [of 2007-2009]," according to Svec. So the increase isn't matching inflation.

“It just means landlords aren’t outpacing inflation, rent growth isn’t outperforming inflation," Svec said. "That said, there are certain markets where we are seeing explosive rent growth, primarily markets in the Southeast and Southwest, the markets that don’t have the legacy overhang of supply as well as have seen much of the demographic growth.”

Retailers in urban downtowns are still suffering from the impact of the pandemic as workers have yet to return to their offices relative to 2019, according to Macy's CEO Jeff Gennette.

"We're having a good year when you think about Herald Square, Union Square, 59th Street at Bloomingdale's, you go to downtown D.C., Philadelphia, [Chicago's] State Street, all those stores are having a very strong year," he said during a third-quarter earnings call last week.

"So, now they are still well below where they were during pre-pandemic. So, there is a lot that needs to come back, and that is how we're looking at the potential tailwind ... of international tourism [coming back]. ... We're watching that one carefully to kind of get those buildings back to 2019 levels."

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