Retailers traditionally bank on Black Friday to earn profits for their annual bottom line, but it’s likely Cyber Monday is a bigger deal these days, according to a Chapman University business professor.
Raymond Sfeir, vice provost for academic administration and director of the university’s business and economics school, told City News Service that Orange County retailers may be looking at a more tepid year in 2025 with so much economic turbulence.
“Things are going up and down and everyone has a different opinion of what’s going on,” Sfeir said. “You look at one thing it tells you something, but look at something else and it tells you exactly the opposite. It’s very unusual this year.”
But, like always, employment “is a very important factor in what consumers spend,” he said. “If they don’t have a job they won’t spend.”
Unemployment nationally ticked up 1% in July compared with July of last year, he said. In September, it was .08% “so things were starting to go down a little bit,” he added.
Then came the furloughs and the federal government shutdown. Employees laid off earlier this year were on the payroll through September, he noted.
The employment picture is even more bleak in California and Orange County.
“The increase in employment is lower than the national levels for most of California,” Sfeir said. “And Orange County is worse than California, and expect that to continue next year. Consumer sentiment has been coming down.”
He said it was at 51% positive in November, compared with 71.8% in November of last year.
“That is huge,” he said. “People are not very optimistic about the economy, partly because of tariffs and their impact on prices, particularly food prices. I don’t think we have seen the full impact of the data. This is going to continue into next year.”
Many retailers were able to curtail price hikes because they boosted inventory in advance of the tariffs, but when that inventory is gone the prices will go up, Sfeir said.
Credit card debt is on the rise as well, he added.
“It’s getting a little bit worse compared with before,” he said. “Those in the middle and below are really struggling. The wealth has increased tremendously in the last year and that is increasing consumption by … those who own expensive homes and stocks. Having much more equity means they consume more, but unfortunately the rest of the public is struggling because the majority of their income is spent on food, so they have to cut down on furniture, clothing, general merchandise and going out.”
Sfeir added that “even fast food places are not doing well. They’re trying to entice (customers) to come back with special deals because even they are struggling, so there is this bifurcation in terms of expenditures between the rich and the poor. That’s why we think GDP will crease 1.8% this year compared with 2.8% (in 2024)… Next year, expect it to be around 2%.”
Inflation is likely to keep rising, which will make for a “very difficult decision from the federal reserve to decrease interest rates,” Sfeir said.
“I think President (Donald) Trump putting pressure on the Fed Reserve and doing what he wants will make inflation worse and he and the GOP will regret it next year if inflation keeps going up. People are going to vote the way the economy is going.”
Sfeir also said many large corporations are downsizing as artificial intelligence is implemented into business models. The stock market has seen record highs, but mostly because of the AI companies, he added.
“I call it a bubble with the AI companies — it’s making some people very rich,” he said. “But if you excise those huge companies, the stock market has not gone as high as it looks.”
Retail sales, including luxuries and food services, increased by 4% in the first eight months of the year compared with 2024, the professor said.
“That looks very good, but I don’t think the last four months are going to look as good,” he said. “I don’t think the increase during the holidays will be as good as last year.”
Last year’s increase was about 3.9% over 2023, but this year could be between 3% to 3.5%, Sfeir said.
“People are going to look for bargains,” he said. “That’s why I think there will be a pull back, but it’s not bad. I just don’t think it will be as good as last year.”
Sfeir advised consumers to not blink and wait out retailers through the holiday season.
“If they want to move their inventories companies will have no choice — they will have to have some bargains,” Sfeir said.
He expects e-commerce to continue to rise.
“Last year the growth was 7.9%,” he said. “We expected it to be at least this much this year. Shopping online is going to continue to grow … More and more people are ordering things online. This is going to continue the rest of this year and next year.”
But for the more traditional consumer, the big shopping centers such as South Coast Plaza, Fashion Island and Irvine Spectrum will have a variety of bargains and attractions to woo foot traffic.
Fashion Island will be open from 8 a.m. to 8 p.m. Friday and will feature the last of its new Merry Market pop-up experience. The pop-up shop features curated selections from retailers and exclusive items, including locally inspired gifts elected by fashion expert Sara Santos.
Irvine Spectrum will feature live performances from the Jessica Louise Duo and the GB Jazz Trio. There will also be holiday DJ sets, live ice carving art and other attractions.