Deep discounts cut into margins as shoppers pull back amid highest inflation in four decades

US retailers experienced what appears to be a muted Black Friday performance as high inflation and sagging consumer sentiment erode Americans’ demand for material goods.

Online sales will rise to between $9 billion and $9.2 billion on Black Friday, Adobe Analytics said in an email. That’s slightly ahead of the company’s earlier projection of $9 billion, which would represent a modest 1% increase from last year. With inflation running at almost 8%, that still means many retailers are losing ground in real terms.

Salesforce Inc.’s analysis, however, suggests a better Black Friday performance.

  • Black Friday online sales growth in the U.S. hit 12%  year over year, Salesforce said.
  • But retailers in the U.S. had to cut prices dramatically to win over price-conscious shoppers. Discount rates likely exceeding 30% throughout Black Friday, Salesforce said.

U.S. consumers are still spending, but they’re growing more cautious after contending this year with the highest inflation rates in four decades. They’re also keeping a sharper lookout for deals, and retailers — many of them still heavy with inventory after misjudging an erosion in demand — are trying to stand out by dangling the deepest discounts since before the pandemic.

Modest Growth

The US holiday shopping season is likely to see modest to break-even growth in annual sales, said Melissa Minkow, director of retail strategy at digital consultancy CI&T. “That’s still a win,” she said, contrasting the outlook with the UK, where high inflation has caused consumers to pull back noticeably on spending. Still, the steep Black Friday discounts are likely to squeeze retailers.


“Profits will not be where retailers want them to be,” Minkow said. That’s in part because they “couldn’t pass all of the inflationary costs off to consumers.”

Black Friday performance driven by Apple products

Spending by 6 p.m. Eastern time Friday had totaled $7.28 billion, Adobe said. Hot sellers on Black Friday included Apple Watches and AirPods, smart speakers and televisions, gaming consoles and espresso machines. In toys, Adobe called out Hatchimals, Funko Pop! and Squishmallows as popular items.