Dana Telsey, CEO of Telsey Advisory Group, shares her perspective on the retail industry and consumer behavior in Barron’s Roundtable.
Editor’s note: The story has been corrected to reflect U.S. consumers’ total credit card debt.
According to recent data from Adobe, consumers are expected to spend between $12 billion and $12.4 billion on Cyber Monday, the capstone of the holiday shopping day, setting a new all-time record for this major shopping day.
The forecast, which beats Adobe’s previous forecasts, will be driven by buy now pay later (BNPL) options as Americans struggle with high inflation.
According to Adobe, the flexible spending option is expected to hit an all-time high on Monday, accounting for $782 million in online spending. That is 18.8% more than in the same period last year.
Black Friday, the holiday shopping season is off to a good start
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AFRM | AFFIRM HOLDINGS INC. | 29.37 | +3.14 | +11.97% |
BNPL services such as Afterpay or Klarna allow shoppers to pay in weekly or monthly installments. They are also marketed as “interest-free loans,” which is why they can be tempting for buyers looking to stretch their budget.
The Afterpay website is set up on a laptop in Sydney. (Brent Lewin/Bloomberg via Getty Images / Getty Images)
According to Adobe, BNPL generated $7.3 billion in online spending from November 1 to November 26, up 14% year over year. On Saturday and Sunday alone, BNPL accounted for $760 million of the more than $10 billion, up 20% year over year, according to Adobe data.
This underscores that consumers are still trying to buy gifts while managing their debts amid ongoing inflation, high interest rates and student loan repayments resuming. For example, Americans have a record amount of credit card debt at about $1.08 trillion, according to a previous report from FOX Business.
The US national debt reaches a record $33 trillion
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WMT | WALMART INC. | 156.77 | +0.71 | +0.45% |
TGT | TARGET CORP. | 131.33 | -0.13 | -0.10% |
AMZN | AMAZON.COM INC. | 147.73 | +0.99 | +0.67% |
MORE PEOPLE DELAY PAYMENT
So far, spending in the first few days of Cyber Week – the five-day period from Thanksgiving to Cyber Monday – has already exceeded forecasts.
A consumer uses a smartphone to shop online. (iStock / iStock)
Even on Thanksgiving, consumers spent $5.6 billion online, up 5.6% from the same period last year. A day later, on Black Friday, online spending reached $9.8 billion, up 7.5% year over year.
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Over the weekend, on Saturday and Sunday, spending reached $5 billion and $5.3 billion, respectively.
Adobe estimates that online spending during Cyber Week will reach $37.2 billion, up 5.4% from last year.
Adobe’s data is not adjusted for inflation. If online inflation were taken into account, there would be even stronger growth in consumer spending, Adobe said.