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Inflation is ‘definitely a big part’ of Black Friday, Cyber Monday sales numbers: Analyst

Argus Retail Analyst Chris Graja breaks down the biggest takeaways from Black Friday and Cyber Monday's sales data and how inflation is continuing to impact consumers' savings and spending.

Video Transcript

DAVE BRIGGS: And if the estimates are accurate, you're probably watching this while shopping online simultaneously. We appreciate it nonetheless. Cyber Monday sales projected to eclipse $11 billion today after a record $9.12 billion was spent on Black Friday. Let's discuss it all with August retail analyst Chris Graja. Chris, nice to see you. The numbers sound huge, except when you think about how much, that is due to inflation. What's your read?

CHRIS GRAJA: Yeah. I mean, some of it is definitely due to inflation. And the place we probably see it the most in my forecast is in grocery stores. Normally, grocery is 1%, 2%, maybe 3% grower. And my forecast for the holiday season is 7 ish. So that's a big part of that. And I cover the consumer products companies. And some of them are raising prices in the neighborhood of in the low double digits. So inflation is definitely a big part of it. And we're comparing with last year as well, where retailers didn't have very many markdowns because there were supply chain shortages.

JARED BLIKRE: And Chris, we're getting some of the online holiday numbers, in addition to the physical stores, and of course, today is Cyber Monday. Maybe you could just go through some of where we stand in terms of the relevance of this year's stats versus prior years and how they fall in line with the March into the last week of the year here.

CHRIS GRAJA: Yeah, it's a really good question. And number one, I would say put any of the numbers we see into perspective. Some of the numbers I think you cited before from Adobe are up kind of 2% to 3% for Thanksgiving and Black Friday. Mastercard put Black Friday sales overall up at plus 12, plus 12 in-store, plus 14% online. In my forecast for holiday sales, overall holiday sales, which is plus 5 for the season, I've got e-commerce as plus 5 for the season.

And that's probably the hardest call I have to make because we're lapping such strong growth over the last couple of years, both in overall retail sales where we're coming off two of the biggest growth years in the last 20, and non-store sales, which is what the category is being called-- is called, up really strong in the last couple of years, both coming out of the pandemic and following on next year.

So the question is how much share does online continue to gain? And one of your guests spoke earlier-- and how much does online lose or is the growth muted by the fact that people just want to get out and shop and return to the excitement of being in stores?

DAVE BRIGGS: Yeah, although it looks like most of the shots and coverage we saw from malls was muted at best. One of the alarming economic trends coming in was consumer savings down and consumer debt skyrocketing. Buy now, pay later seems to be a trend that really popped up on Black Friday. What was the shift like there?

CHRIS GRAJA: You know, I think the one thing that stuck out to me as I visited stores was kind of a little bit disappointing. And it syncs with the point you just made. I think Walmart calls it action alley. The way I went into the store, the first things you saw were rice and beans and cans of spaghetti and meatballs, flour, cooking oil, all things that were really put there to help people make ends meet in a very tough time.

I mean, these weren't frilly and highly discretionary items that people who shop at Walmart, basically everybody, would be buying when they were flush with cash. So I mean, that's kind of the lower side of the bifurcation that we're definitely seeing in the economy.

JARED BLIKRE: Getting back to the inflation question here, we've seen-- is it-- it seems to be making it difficult for comps. In other words, if we got headline inflation at 7% and sales are running at 5% year over year, in addition, so it's a-- I guess you would say it's a 5% spread from last year. But it's still running under the inflation rate. Is that actually a beat? That's a question that I'm hearing.

And then I see in your notes, you're further expanding the universe of sales here. You're grouping them by grocery stores, general merchandise, e-commerce. Is that simply because it's difficult to make these comps given the inflation backdrop?

CHRIS GRAJA: So, yeah, I'll try to get both your questions. I mean, the thing that's so hard is that the traditional trends have changed since the pandemic. And then the first big thing was the first year of the pandemic, the way-- I calculate it the same way the National Retail Federation does. So it excludes auto dealers. It excludes gas stations. It excludes restaurants.

So that first year of the pandemic, nobody was going to restaurants and all that money went into grocery stores. This year, the thing that's weird, as we talked about before, is we have all of the growth in grocery stores, normally a low single digit category, probably growing 7%. General merchandise, I got it 4, e-commerce at plus 5. And the reason I call those three items, they are the three biggest within the universe. And they're the three that have the biggest impact on the move. E-commerce has a very big delta.

And to your other point, in terms of the comp sales, the one place where we see it very clearly is in some of the consumer products companies, where they'll actually call out-- they'll call out their organic sales, and then they'll call out volume, and then they'll call out pricing. And in some of the cases-- this is a hypothetical-- I mean, you'll see a 10% increase in sales, and it's plus 12 in pricing and down 2 in volume.

And then within the retailers, you'll see it broken out by traffic and ticket. And some of them will even go further, and they'll break out the average unit retail will make out price, and then they'll break out units per transaction. So not all of them dive that deeply. But your point is a good one, that a lot of the growth we may be seeing may be coming simply from higher prices. That's a factor in inventories as well.

JARED BLIKRE: The age old distinction between nominal and real. So thank you for that analysis. Chris Graja, thank you.