Digital, in-store retailers battle on Cyber Monday
Sandra Aguilar nabbed her Cyber Monday deal early as she juggled the morning hassles of motherhood.
Before leaving home, she ordered a bargain-priced sound system to amplify her TV. Shortly after noon, she arrived at a Walmart store in Katy to pick it up. She scanned a barcode on her smartphone at the store’s bright orange Pickup Tower, and an associate lifted it into her shopping cart minutes later. Her baby, riding along, hardly fussed.
“It’s really convenient,” she said. “You don’t have to deal with three kids while shopping.”
Cyber Monday was expected to be the largest online shopping day in U.S. history, and even traditional retailers are rushing to catch up as consumer habits shift further toward speed and convenience. More than ever, consumers are seeking steep discounts, faster delivery and the hassle-free promise of in-store pickup for online orders.
Adobe Digital Insights predicted $6.6 billion in on-
line sales on Monday, up 16.5 percent from last year. By comparison, the firm recorded $4 billion spent online that day in 2014.
By midafternoon, Adobe reported that consumers had already spent nearly $3.4 billion online, up 16.8 percent from this time last year.
The National Retail Federation, citing lower unemployment and higher consumer confidence, anticipates overall holiday spending in November and December to rise between 3.6 and 4 percent, up from $655.8 billion last year. But continuing a trend of the last several years, e-commerce will record the strongest gains.
Holiday promotions began even earlier this year, and price wars have become especially fierce online as retailers compete for shopper loyalty against Amazon.com and other e-commerce giants. In its inaugural survey of 100 retail executives, global accounting firm BDO found that nearly 70 percent of respondents believed that price competition would be their biggest challenge this holiday season.
“This is going to be a very discount-and promotion-driven season,” said Natalie Kotlyar, the firm’s retail and consumer business leader.
Digital vs. physical
Many retailers have continued upping the ante with perks like free shipping, which more consumers have come to expect amid the rise of Amazon Prime and other services that expedite delivery. Retail analytics company Dynamic Action, in partnership with Accenture, found that retailers have shipped 51 percent more orders for free this season than last.
Jill Standish, Accenture’s senior managing director for global retail, said the battle to slash prices and deliver goods for less money could eat into retail earnings this season, even as consumers spend more freely.
“When you’re trying to woo as many people as possible into shopping with you, it will take its toll” on profitability, she said.
Some retailers have doubled down on in-store pickup for online orders, an option that brickand-mortar retailers hope will encourage crossover between digital and physical purchases and save them money on shipping. Target, for example, now offers in-store pickup in all of its stores nationwide and says demand is growing.
At the company’s Houston store in the Heights, employees have for days been scurrying throughout the store, gathering orders for pickup. Store manager Cameron Dennington said 10 employees filled that role Monday, the most the store had required this season.
“We are absolutely slammed,” he said.
Walmart and Amazon, two of the fiercest competitors on price, have been battling for months, each with a different strategy.
Amazon, which began rolling out deals months ago, has made its steepest price cuts during the Thanksgiving shopping weekend. It has routinely offered “lightning deals” in an effort to capture the impulse buy once confined to the in-store experience.
New pickup service
Walmart expanded its online assortment to 67 million individual items this year, up from 20 million last year. That includes items available through Jet.com and Bonobos, the high-end men’s retailer it acquired earlier this year.
Walmart has also aggressively marketed the pickup service by installing so-called Pickup Towers in nearly 100 stores nationwide, including four in Houston. More are on the way next year.
The towers act like massive vending machines that dispense online orders as large as a midsize microwave. Customers approach a screen, scan their barcode, and the tower produces the order. The system notifies associates of larger orders, which are then whisked from storage.
“You can pick up in a matter of seconds,” said spokeswoman Anne Hatfield.
Mariajose Hernandez, who shops online with Walmart on a near-weekly basis, approached the tower Monday to retrieve the TV cable she snagged at a discount Black Friday. She likes the convenience of in-store pickup, and she knew exactly how to work the machine.
“It’s the best thing ever,” she said. “I always prefer to shop online.”