What: Black Friday in the US was a success. But is it built on sound foundations?

Why it is important: Conditioning customers to low prices and discounts is not new, but it is key for retailers to know the limit before it is too late for them.

US online shoppers set a record by spending $38bn during the post-Thanksgiving period, including $12.4bn on Cyber Monday, the biggest digital shopping day in US history. This 8% increase from last year indicates a potentially lucrative festive season, with higher foot traffic in malls and a rise in credit card spending. Despite negative economic sentiment surveys, retail spending contributed to a significant GDP growth in the third quarter. However, uncertainties remain with slowing labor markets, high mortgage rates, and the resumption of student loan payments, balanced by cooling inflation and lower gas prices.

The surge in online shopping is partly attributed to the convenience of mobile shopping apps and the growth of buy now, pay later programs, raising concerns about overspending. Heavy promotional discounting also drove sales, but this strategy risks hurting profits if it cannibalizes full-price sales.

Retail giants like Walmart and Best Buy have expressed concerns over increasing reliance on discounts. Compared to last year, when consumers shopped early due to COVID-related issues, this year saw more waiting for holiday promotions. This trend might lead to a challenge familiar to brick-and-mortar stores: customers refusing to pay full price and expecting discounts, potentially leading to a post-holiday slump for online retailers.

Black Friday bonanza could lead to a festive hangover for retail