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Deal-hungry shoppers hit stores on Black Friday to kick off critical holiday season

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Deal-hungry shoppers hit stores on Black Friday to kick off critical holiday season

Bustling crowds and early-morning lines were back as this year’s Black Friday weekend kicked off — a hopeful sign for retailers as they head into the critical holiday shopping season with consumers still grappling with inflation and economic uncertainty.

Shoppers plan to spend an average of $650 during the four-day consumer sprint from Black Friday through Cyber Monday, according to a Deloitte survey, up 15% from last year. Eight out of 10 people said they planned to do some sort of shopping during that stretch, when retailers try to jumpstart holiday sales with deals, the survey found.

The National Retail Federation also made encouraging projections, saying it expects as much as $989 billion in sales during the holiday shopping season, which would mark a 3.5% jump over last year’s total.

Although that would be a slower pace of growth compared with holiday shopping in previous years, NRF Chief Economist Jack Kleinhenz said, “We remain optimistic about the pace of economic activity and growth projected in the second half of the year.”

“Household finances are in good shape and an impetus for strong spending heading into the holiday season, though households will spend more cautiously,” he said.

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Consumers in all income groups plan to spend more than last year, but those in the highest and lowest brackets are expected to increase their spending the most, the Deloitte survey found. Shoppers who make $50,000 or less per year plan to spend $422 over the weekend, up 22% from last year, while those who earn $200,000 or more are expected to spend $1,257, up 20% from last year, according to the survey.

Spending is expected to be highest among millennials, who are also more likely than other age groups to buy gifts for themselves. They will spend around $750, according to the survey, while baby boomers will spend about $485.

Commerce’s Citadel Outlets was bustling Friday morning, with many families saying they’d been scouring the massive shopping center for hours scouting for deals.

Shoppers rest after being out for 12 hours overnight during Black Friday at the Citadel Outlets in Commerce.

(William Liang / For The Times)

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“Honestly, you’ve got to come in with the mentality: It’s Black Friday,” said Gus Aguirre, a Simi Valley barber, who said his family never misses the biggest shopping day of the year. “It’s going to be busy, there are going to be lines, and people are going to be frustrated.”

He said the family tradition is more of a way to work off last night’s meal than get the best deals, which he says don’t feel all that special compared with what’s offered online.

“I feel like everybody started earlier in terms of releasing deals,” Aguirre said. “Last year was a little bit more hectic.”

By 9 a.m., he’s walked almost two miles — 5,830 steps, according to his partner’s tracker — and had the shopping bags full of Christmas gifts to show for it. He said business at his barbershop this year has been better than last, and he’s feeling less pressure to save.

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Griselda Maldonado, meanwhile, came to the outlet with a hard spending cap. She and her 14-year-old daughter, Valentina, were going to stay until they spent $300.

They hit it quickly, she said, with the deals proving more lackluster than the family had hoped. Maldonado got some cosmetics and her daughter a jean skirt from Hollister. The 14-year-old said she’d been hoping for Samba shoes from Adidas, but they’d sold out by 6 a.m., when they arrived.

“We’re done,” Maldonado said. “There’s no extra money. This is it.”

Monique Carver and Gilbert McDonald said they were also feeling overwhelmed by the prices, but determined to get through some of their Christmas list — especially tiny Ugg boots for their baby granddaughter. They suspected they could get the same sort of deals during other times of the year, but shopping in person on Black Friday felt “festive.”

“I like hands-on shopping,” McDonald said. “The sales are all right.”

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Big-box retailers prepare for months for the day after Thanksgiving, which for many marks the start of the holiday shopping season and serves as an indicator of consumer confidence.

High hopes about the economy, an increase in e-commerce activity and significant Black Friday participation among Gen Z and millennials will contribute to record spending this year, said Summer Taylor, a retail managing director at Deloitte. Shoppers will also have a strong focus on value, she said, and many will prioritize saving money over brand loyalty.

Rachel Stankus, right, and her mom, Jane Codd shop in the Disney Outlet store during Black Friday shopping.

Rachel Stankus, right, and her mom Jane Codd shop in the Disney Outlet store on Black Friday at the Citadel Outlets in Commerce.

(William Liang / For The Times)

To prepare, major retailers have lined up discounts and offered early sales in the days leading up to Thanksgiving. Walmart unveiled online deals starting Nov. 25, including $250 off a Dyson vacuum and $600 off a Sony television. Target announced discounts beginning Nov. 21, offering 50% off a variety of items including holiday decor, toys and appliances.

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Consumers nationwide will spend 56% of their holiday budget between Black Friday and Cyber Monday, Deloitte found. Many start spending sooner.

“For the last 10 years or more, Black Friday sales have started creeping in earlier and earlier,” said Lars Perner, a professor of clinical marketing at the USC Marshall School of Business. “It becomes an arms race to offer the big sales sooner,” he said.

Early spending may drive future spending, Perner said, which could bolster retailers trying to unload holiday-themed goods before the end of the season.

“The economy is, to a very large extent, driven by psychology,” Perner said. “When consumers do spend, that tends to spur on the economy.”

Target reported underwhelming third-quarter results this month and lowered its fourth-quarter outlook, while Walmart posted strong sales and a 27% increase in e-commerce.

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“Saving money remains a top priority for our customers,” Walmart said in a statement provided to The Times. “We think we’re in a strong position to serve our customers throughout the holiday season.”

Retailers have to walk a fine line between attracting customers with discounts and maintaining healthy margins, said George Noceti, a wealth advisor at Morgan Stanley. Consumers are wary of high prices amid inflation and will shop around to seek out discounts, he said. The Deloitte survey found that 45% of shoppers reported experiencing higher prices for holiday gifts this season.

“The retailers know that they have to promote and discount,” Noceti said. “Those that do will benefit the most by having greater sales, but if they promote and discount too much, they’re going to have lower profitability.”

Crowds of people during Black Friday shopping at the Citadel Outlets.

Crowds of people shop for Black Friday deals at the Citadel Outlets in Commerce.

(William Liang / For The Times)

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Noceti said he expects Black Friday sales to be on par with or slightly above last year’s numbers. Despite data from Deloitte that show Angelenos are more optimistic about the economy than last year, the average American consumer is still operating cautiously, he said. Shoppers may be hesitant to spend because of high prices of everyday goods such as groceries and may feel unsure about the economy amid global conflict and the recent election.

“California is different from the rest of the nation,” Noceti said. “Consumer confidence isn’t sky high, and people won’t spend their whole wallet on Black Friday.”

Consumers will split their spending evenly between in-person and online purchases, according to the Deloitte survey, but online shopping is growing at a faster rate. Whereas Black Friday foot traffic is expected to remain flat year over year, online spending could rise up to 15%.

The National Retail Federation also expects online sales to climb, saying in its holiday sales report that online and other non-store sales are expected to increase between 8% and 9%.

Online-only merchants are expected to be a popular destination this Black Friday weekend, with 69% of Deloitte survey respondents planning to stay home to shop at online-only retailers. Shoppers will spend an average of $195 on online purchases through Cyber Monday.

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Retailers are relying more and more on so-called omnichannel shopping, which allows customers to browse products across in-person and online platforms.

“We aim to engage our customer where they are with an omnichannel strategy that puts product storytelling at the forefront across digital, social and in store,” Gap Chief Marketing Officer Faby Torres said.

Gap’s online platform offers customers Black Friday deals of 50% off sitewide, with some exclusions.

“Black Friday and Cyber Monday are all about value,” said Stephen Rogers, a managing director at Deloitte. “This year, all income levels and age groups are looking for deals. Consumers are relying on this week to stretch their dollars.”

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Sales of Raw Farm's products suspended amid bird flu concerns

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Sales of Raw Farm's products suspended amid bird flu concerns

State agriculture officials on Thursday banned Fresno-based Raw Farm from distributing its raw dairy products to retailers amid ongoing concerns about possible bird flu infections among its cattle.

However, with the exception of two limited recalls announced in the last few days, products from the farm that are already on store shelves can remain available for sale.

The ban comes after several days of contradictory test results conducted by different state and local health agencies, in which county public health departments found presumptive positive samples in bottled raw milk on store shelves, while state agriculture officials did not detect the virus in bulk milk tests.

On Thursday, California’s agriculture department reached out to the owner of Raw Farm LLC, Mark McAfee, and instructed him to suspend all sales to retailers.

“When raw milk disappears from the stores, that will be it,” he said.

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According to McAfee, neither the agriculture or health department have recalled any products other than those involved in two limited recalls made in the past week involving quarter-gallon “cream top” whole milk products.

McAfee confirmed to The Times that his cows have H5N1 bird flu virus. He said he was not aware the cows had the disease until this week because they “are so healthy that they do not show the classic signs or symptoms. They are mostly all asymptomatic.”

He said two or three of his 1,800 cows had spiked a virus on Oct. 10, but he said they were not positive for the virus. He said he removed those cows from the herd.

It is unclear how long the cows were separated, or if a veterinarian or other professional tested the animals for H5N1.

He said regular bulk milk testing by the state’s agriculture department has consistently been negative.

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“Obviously, we have some asymptomatic shedders at very low levels,” said McAfee.

He said he had a previous fever spike among his cows in August. Again, he said, the virus was not confirmed in the herd at that time.

He said he monitors each cow at his farms with a device that sits in a cow’s udder and sends real-time information about the animal’s body temperature, milk acidity, etc.

Last week, public health investigators from Santa Clara County tested a retail sample of raw milk they acquired at a store. That sample tested positive for presumptive H5N1 bird flu. The state’s public health department soon confirmed that finding and Raw Farm recalled a specific batch that was already off the shelves.

Meanwhile, the state’s agriculture department, which had been routinely testing Raw Farm milk products kept getting negative results — leaving infectious disease experts confused.

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Then on Wednesday, Santa Clara County Public Health officials announced a second batch of presumptive H5N1-positive milk from Raw Farm. They made the announcement only hours after state agriculture investigators swept Raw Farm’s two herds, creamery, trucks and milk tank for samples.

According to McAfee, some of the samples collected by state officials also tested positive.

Questions to the state’s agriculture and public health departments, which were closed for the Thanksgiving holiday, went unanswered Friday.

On Wednesday, health officials from the L.A. County’s public health department expanded its list of retail stores that may have carried recalled raw milk products.

Untroubled by the positive tests and the possibility of selling raw milk products tainted with the bird flu virus, McAfee told The Times that he is urging consumers to “get to the store. Immediately!”

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The magnitude of the risk to raw milk consumers is unclear. So far, 55 Americans have contracted H5N1 bird flu this year; these were predominantly dairy and poultry workers who were likely infected through their close proximity to animals and not by consuming contaminated products.

In two of those cases the source has not been identified, including a child in Alameda County who tested positive earlier this month.

In addition, a teenager in British Columbia was infected more than two weeks ago and has been in critical care since.

McAfee said herd immunity among his cows is his goal, and that when he’s clear to restock store shelves, “all of our raw milk will have antibodies to influenza HPAI H5N1. That’s awesome!”

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How China Became the World’s Largest Car Exporter

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How China Became the World’s Largest Car Exporter

Source: Alix Partners

Note: 2024 values are estimated.

Just two decades ago, China had little capacity to make cars, and owning one was considered novel. Today, China produces and exports more cars than any other country in the world.

President-elect Donald J. Trump has promised to impose new tariffs on China. Many countries, including the United States, already levy extra tariffs on China’s electric vehicles. But with all of the advantages China wields in automaking, this pushback is unlikely to undercut China’s dominance.

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China’s home market for car sales is the world’s largest — almost as big as the American and European markets combined.

As China’s domestic market grew, so did its production capacity, propelled by massive government investment and world-beating advances in automation. Yet in recent years, the pace of sales has fallen behind as consumer spending slows in China’s economic downturn. The result is that China today has the capacity to make nearly twice as many cars as its consumers need.

Source: GlobalData

Note: 2024 values are estimated.

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To deal with the excess, China has increasingly looked overseas to sell cars.

China is a leader in the transition to electric vehicles and it exports more of them than any other country. Chinese brands like BYD are becoming known worldwide for offering advanced electric cars at the most competitive prices. And as Chinese drivers have shifted rapidly to electric vehicles, demand for gasoline-powered cars in China has plunged and many are being exported instead.

But China’s trading partners say that China’s exports of both electric and gasoline-powered cars imperil millions of jobs and threaten major companies. Earlier this year, the United States and the European Union put significant new tariffs on electric cars from China. Governments are concerned because the auto industry plays a big role in national security, producing tanks, armored personnel carriers, freight trucks and other vehicles.

What’s more, China has used steep tariffs and other taxes as a barrier to car imports, so that practically all of the cars sold in China are made in China.

Here’s how China took the lead in the global car market.

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Decades of investment in electric cars pays off

Last year, China sold 1.7 million electric cars abroad, nearly 50 percent more than the next largest exporter, Germany. Since 2020, shipments have skyrocketed.

The top destination is Europe, where consumers prefer small, compact models like those sold in China.

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Southeast Asia is another big market, where buyers increasingly prefer Chinese cars for their cheaper prices.

China also exports a small but fast-growing number of plug-in hybrid cars. Hybrids are particularly popular among buyers who may not have access to extensive charging networks but still want electric cars for short trips.

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China has invested heavily for more than 15 years in developing electric cars, to limit its dependence on imported oil. Wen Jiabao, China’s premier from 2003 to 2013, made electric cars one of his highest priorities. In 2007, he reached outside the Communist Party to choose Wan Gang, a Shanghai-born former Audi engineer in Germany, as the country’s minister of science and technology. Mr. Wen gave him essentially a blank check to make China the world’s leader in electric cars.

Now, half of China’s car buyers choose battery electric or plug-in hybrid cars. Until recently, buyers of electric cars also received large subsidies from the government. Carmakers have received low-interest-rate loans from state-controlled banks to build dozens of factories, as well as government tax breaks and cheap land and electricity. By one estimate, Beijing’s assistance to China’s electric car and battery sectors has been worth more than $230 billion since 2009 — one reason that the European Union has imposed anti-subsidy tariffs.

China is projected to continue its heavy investment and retain its lead in electric vehicles.

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Unloading excess gasoline cars at steep discounts

Because of the shift to electric cars in China, carmakers have been left to slash prices on unwanted gasoline cars and unload them overseas. Last year, most of the cars China sold abroad were traditional gasoline engine cars.

Russia was the leading destination last year. Sales surged after the Ukraine invasion, partly because of the departure of Western brands from the Russian market.

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China’s gasoline cars were also favored by middle- and lower-income countries in Latin America and the Middle East for being cost-effective.

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China has more than 100 factories with a combined capacity to build close to 40 million internal combustion engine cars a year. That is more than twice as many as people in China want to buy, and sales of these cars are dropping fast as electric vehicles become more popular.

As a result, some assembly plants have been mothballed or shuttered. But automakers, reluctant to close facilities, are selling many gasoline-burning cars overseas at steep discounts.

Will tariffs be able to slow China down?

The flood of Chinese cars into the global market has raised alarms around the world. In addition to the European Union, governments elsewhere have levied extra tariffs on electric cars from China, on top of baseline taxes already applied to all imported vehicles.

Additional tariffs levied on Chinese electric cars in major world markets

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Note: Chart does not show baseline taxes or favored rates dependent on manufacturer or other compliance. India and Brazil levy tariffs on imported electric cars from all countries. Turkey levies the same tariff on all cars from China.

The countries’ tariffs come in different forms. The U.S. government levied a flat tax. The European Union calculated a rate for each automaker based on the estimated subsidies the company has received from Chinese government agencies and state-controlled banks. India and Brazil are also aiming to protect their local industries.

But tariffs may not fully offset Chinese carmakers’ competitive lead. Chinese companies offer cars with similar quality to their global rivals and at lower cost. Analysts at the bank UBS calculate that cars made by BYD cost 30 percent less to assemble than similar cars made by Western companies. Some of the biggest savings for Chinese companies are on batteries. China controls practically the entire supply chain for making electric car batteries.

Production costs are much lower in China

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Source: UBS

Note: Models compared are of similar size and function. Prices are in U.S. dollars, for models from 2021.

With the advantages China wields in automaking, even the world’s intensifying pushback is unlikely to stop the country from dominating the industry for many years to come.

BYD electric cars stacked for loading onto a ship for export at Taicang Port in Suzhou.

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Agence France-Presse — Getty Images

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Rivian receives conditional $6.6-billion federal loan for plant, new models

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Rivian receives conditional .6-billion federal loan for plant, new models

Irvine electric vehicle maker Rivian has received conditional approval for a federal loan of up to $6.6 billion that would help fund construction of a Georgia plant where it could manufacture smaller and more affordable SUVs.

The company said late Monday that the loan from the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing Loan Program would support construction of a plant outside Atlanta that Rivian halted work on this year after losing $5.4 billion in 2023.

“This loan will help create thousands of new American jobs and further strengthen U.S. leadership in EV manufacturing and technology,” Rivian founder and Chief Executive RJ Scaringe said in a prepared statement.

Rivian said it “must satisfy certain technical, legal, environmental, and financial conditions” before the department gives final approval and funds the loan.

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Shares of Rivian were up 4% to $12.06 in early afternoon trading.

The funding comes just weeks after Rivian and Volkswagen Group entered into a joint venture that could deliver as much as $5.8 billion to the electric vehicle maker, which is supplying the German company electronic and computer components for its own electric vehicle program.

The venture significantly boosted the finances of Rivian, which went public in 2021 amid strong investor interest in EV makers, but the market has been slowed by higher interest rates and other challenges. Rivian also has struggled with supply issues and production.

The company cut 10% of its 16,700-plus workforce earlier this year and recorded a net loss of $1.1 billion, or $1.08 a share, in the third quarter. It employed about 2,200 locally in 2023, according to the Orange County Business Journal.

The loan was approved by the Energy Department in the waning days of the Biden administration, whose 2022 Inflation Reduction Act set aside some $500 billion to boost clean energy and make other investments in the economy. The administration’s announced goal has been to have half of all cars sold nationally be electric by 2030.

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President-elect Donald Trump has said he wants to pull back any unspent funds of the act, but the law has drawn bipartisan support as much of the funding has flowed to Republican-led states. The planned Rivian plant has the support of Georgia Gov. Brian Kemp, a Republican.

“Today’s announcement reinforces the Biden-Harris Administration’s commitment to strengthen the nation’s manufacturing competitiveness, helping ensure American businesses remain global leaders in the rapidly expanding EV industry,” the Department of Energy said.

Karl Brauer, executive analyst at iSeeCars.com, an automotive research website, said the loan reflects the Biden administration’s efforts to put “a wide range of things in place as quickly as possible.”

“They won’t control the agenda any longer,” he said, adding that the loan would give Rivian a “much longer runway and much needed financial help.”

This is not the first time the department has made a large loan to support the electric vehicle industry. In 2010, it gave a $465-million loan to Tesla Motors to help fund its vehicle development and to build its Fremont, Calif., factory.

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At full capacity, the EVs manufactured at Rivian’s Georgia facility are expected to yield an annual fuel consumption savings of roughly 146 million gallons of petroleum, the energy department estimated.

Rivian sold about 50,100 vehicles last year, boasting that its full-size, three-row R1S is the top-selling SUV in California in the above-$70,000 price category. But it has yet to release cheaper models that appeal to a broader market. It also makes delivery vans for Amazon.

The company is already expanding its sole plant in Normal, Ill., where it makes the R1 and plans to start production in 2026 of the midsize R2 SUV, which would start at about $45,000 and be released in the latter half of that year.

Rivian said the loan also would provide “significant funding” for the development of the platforms of the R2, as well as even more affordable midsize crossover models called the R3 and R3X — all of which the company said are crucial for its long-term growth and profitability.

The company said it would build the new plant in two phases, each with an annual production capacity of 200,000 vehicles.

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If the loan receives final approval, it would be secured by all assets of the project and fixed assets and guarantees of Rivian and some of its subsidiaries, the company said.

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