Freaky Friday

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What's going on?

A record number of bargain hunters are expected to check out Black Friday sales, yet retailers still gave investors a warning.

What does this mean?

Americans have been too pinched by the rising cost of living to fully treat themselves. So it’s no wonder the National Retail Federation expects over 182 million shoppers to scout out discounts between Black Friday and Cyber Monday, nearly 10% more than last year. But if recent retailer results are anything to go by, those hoards could be doing more window shopping than credit-card swiping. After all, savvy shoppers know prices can’t stay high forever, and the longer they hold out, the more likely they are to lock in a better deal. That’s why retailers like Best Buy, Abercrombie & Fitch, and BJ’s Wholesale Club told investors to manage their expectations this holiday season.

Why should I care?

For markets: Don’t shop unless they drop.
Even if shoppers wait it out, there’s no guarantee that retailers will yield. After all, when shops slim their prices, folk assume there’s plenty of stock to get rid of – so if they wait a little longer, the discount labels might come out once again. That standoff could last a while, unless the looming holiday deadlines encourage shoppers to pull the trigger. Either way, retailers that have nailed their inventory levels will fare better: that’s those with enough stock to sell, but not enough that they need to cut prices to shift the lot.

The bigger picture: You’re on your own now.
The US economy has held steadier than expected this year, not least because Americans were especially resilient: consumer spending has managed to tick upward over the past few months. But the pandemic savings they used to cushion their bank balances are running out, so the next lot of data may well indicate a more cautious approach to splashing the cash.

Originally posted as part of the Finimize daily email.

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