Record Cyber Monday could signal full sprint
Holiday shopping season is off and running
Retailers got off to a strong start to the holiday season over the Thanksgiving weekend as shoppers set records in online purchases and hit the malls in a big way.
But the next big test comes with Cyber Monday, when consumers are expected to take to their keyboards in record numbers to chase online discounts.
Shoppers spent $5.03 billion on Black Friday, traditionally one of the biggest shopping days of the year, 16.9% more than on that day in 2016.
Black Friday shoppers spent $5.03 billion. The Cyber Monday forecast: $6.6 billion.
That’s a new record, according to Adobe Analytics.
Thanksgiving Day also saw a surge in online spending, with purchases leaping 18.3%, to $2.87 billion, compared with last year, Adobe says. That bolstered the forecast that Cyber Monday could become the largest online shopping day in history, generating $6.6 billion in sales, 16.5% more than in 2016.
ShopperTrak, meanwhile found that customer visits slipped less than 1% on Black Friday and dropped a combined 1.6% over both Thanksgiving and Black Friday. In-store traffic declined 4.5% on Black Friday, according to RetailNext, which analyzes in-store performance.
Yet given the dire predictions for traditional stores, just standing up to online retailers would be considered a victory.
“It was a huge win,” said Rod Sides, vice chairman of consulting firm Deloitte. “I think bricks-and-mortar (malls and stores) held their own this weekend, which is exactly what (retailers) were wanting and needing this holiday season.”
Online sales were pushed by consumers’ growing use of mobile devices for purchases. Online retail giant Amazon said purchases made via its mobile app were 50% higher on Thanksgiving than the number placed on smartphones and tablets on the same day last year.
The long weekend was the first big test of the holiday season, the make-orbreak period for retailers. It’s particularly crucial this year in pointing to the future of chains like Toys R Us, which is restructuring under bankruptcy protection, and iconic but troubled companies like Sears and J.C. Penney, which have shuttered stores amid dwindling profits and sliding sales.
“The holiday is when the brightest light gets shone on your business,” says Charlie O’Shea, lead retail analyst for the credit rating agency Moody’s. “If the website isn’t up to snuff ... (customers) are not going to shop, and if your stores aren’t looking fresh, they’re going to walk out and they’re going to go somewhere else.”
But the door-busting, deep-discount sales that are the hallmark of Black Friday and the Thanksgiving weekend pose a dilemma for many retailers. They need to offer deals to price-conscious shoppers, particularly when trying to compete with online giant Amazon and the world’s biggest retailer, Walmart. But if they discount too much, they erode their profits and undermine their bottom lines.
“Amazon and Walmart are battling over market share in many different categories,” said O’Shea, who added that the turf war is “rippling throughout retail. ... There’s a lot of retailers especially during the holiday that are going to have some tough decisions to make on whether they can price that low.”
The answer won’t come until January or February, when most retailers report their fourth-quarter financial performance, he says. But “fighting with Amazon and Walmart in a price battle is not usually successful.” O’Shea says.
Still, Sides says, retailers carefully assess what they need to charge to woo customers and still make money. “Most would like to be promotional early and then they can adjust vs. not having an offer that’s compelling and having the consumer go somewhere else,” he says.
In Rehoboth Beach, Del., Ayla Orteza, manager at a Michael Kors outlet, said the throngs arrived between 3 and 5 a.m. Friday morning, and managers of several other outlet stores agreed the Black Friday rush had come and gone by the time the sun came up.
Rhonda Graphos and Robynn Gershmehl, sisters from Appleton, Wis., said they got plenty of online shopping done well before Black Friday, so their lists were shorter and the need to fill their carts on that day a little less urgent.
Said Gershmehl, “It was nice not getting beat up by the crowds.”
“I think bricks-and-mortar (malls and stores) held their own this weekend, which is exactly what (retailers) were wanting and needing this holiday season.”
Rod Sides Vice chairman of consulting firm Deloitte