As figures come in, retailers have lots to ponder
Americans did quite a bit of shopping over the last five days, and the future of retail is becoming clear: The midrange shopper has abandoned brickand-mortar stores for online retailers.
Overall, 65 percent of American consumers made a purchase over the Thanksgiving holiday weekend, either in-store or online, spending a weighted average of $420, according to Gordon Haskett Research Advisors, a retail data analysis company that surveyed 1,000 shoppers.
Online shoppers spent a record $5.03 billion by the end of Black Friday, an increase of 16.9 percent year over year, according to data from Adobe Analytics. Cyber Monday was expected to generate $6.6 billion in online sales, the largest ever.
The number of Americans who went to stores on Black Friday, though, fell by 4 percent compared with last year, the Wall Street Journal reported, citing data from Retail Next, which counts faces on store cameras.
That means fewer purchases made in stores, which is bad news for those stores, but some helpful patterns are emerging.
Early indicators show that bargain hunters and luxury shoppers went to the stores on the opening weekend of holiday shopping, while middle-class consumers used their phones and computers to avoid the hassle to fighting the crowds for products easily
found online at a decent price.
Discount retailers were the big winners with in-store sales, with Walmart, Kohl’s, Dollar General, Dollar Tree and Family Dollar, according to Gordon Haskett. Walmart made a point of offering special in-store-only discounts on items that are expensive to ship, hoping to generate more foot traffic.
The lesson for brickand-mortar retailers, and their landlords, is that they have to offer the best price exclusively in their stores, or they need to offer a fabulous shopping experience for equally exclusive goods.
High-end shoppers tend to want exclusivity and a great shopping experience. They want to talk to an expert and inspect an expensive item before purchasing it. The experience of buying an item is nearly as important as the item itself, and the price is less important if the retailer meets the customer’s expectations.
Midpriced retailers are never going to out-compete the discount specialists, so the challenge for them is whether they can offer an in-store experience that makes it worthwhile for a customer to visit the store and perhaps pay a slightly higher price for a product available online.
This kind of merchandising is called experiential retail, and it’s a hot topic in retail circles. The best example of experiential retail, its grandmother if you will, is the American Girl store in New York. The store is so successful, Mattel has opened a new 40,000-square-foot New York City flagship at 75 Rockefeller Plaza.
The girls who visit the store are already aware of the brand and probably already own American Girl dolls. The store offers them a complete immersion into the brand, including appointments with their dolls for hairstyling, ear piercing and manicures.
Adult versions include vintage furniture stores that include a bar and coffee shop with music coming from vinyl records, which are for sale also. Or a cafe with a boutique in the back filled with clothes made by local designers that can’t be found online.
The biggest challenge, though, will be for department stores as they try to compete with Amazon to sell goods made in the millions, not the hundreds. Unless they can develop experiences that beat the convenience of shopping at home via a computer screen, they have limited years left in business.