Holiday Season Business Off to a Good Start
The 2017 holiday season is off to a strong start after consumers beat forecasts for shopping during the Black Friday Weekend and Cyber Monday, the traditional beginning of the holiday shopping season.
During the five-day period which took place over the Thanksgiving holiday and ended the night of Nov. 27, 174 million Americans shopped in physical stores and online, which beat a forecast of 164 million initially estimated by National Retail Federation and Prosper Insights and Analytics. NRF’s and Prosper’s consumer sentiment survey, released on Nov. 28, also found that average spending per person over the five-day period was $335.47. Of that amount, 75 percent—or $250.78—went to gifts. Millennial shoppers (25 to 34 years old) were among the biggest spenders. Their average spend per person was $419.52.
The survey also reported a rally for the long-suffering department store model, finding that 42 percent of those surveyed said that they shopped at a department store. E-commerce and M-commerce shopping skyrocketed during the Black Friday weekend. But much of the weekend’s action was in omni-channel shopping, or shopping in a multitude of formats.
The survey found that 58 million shopped online only; more than 51 million shopped in stores only; but 64 million shopped both digitally and in physical stores. The multi-channel shopper was a bigger spender. This consumer spent $82 more than the digital-only shopper and $49 more than the bricks-and-mortar-only shopper.
ShopperTrak, a market research group, reported that in-store traffic declined 1.6 percent in a year-over-year comparison with last year. In a Nov. 28 note, Retail Metrics said that Cyber Monday digital sales reached $6.59 billion, making it the largest U.S. online sales day in history.
NRF releases annual surveys on Black Friday weekend business, but the group said that it changed survey methodologies in order to include Cyber Monday business, which is now central to the weekend’s results. Since 2017 is the first year trying a new methodology, surveyors did not compare it to previous year’s results. Also in past years, NRF surveys included total spending for the period’s business. It did not do so this year. Instead, NRF will report total spending in December after the US Census Bureau releases its numbers on November business.
The NRF was one of a group of organizations and pundits releasing statements on Black Friday and Cyber Monday business.
Ken Perkins of Retail Metrics wrote in a Nov. 28 note the weekend’s business was supported by a good economy and good weather.
“A plethora of deals, a cooperative clear cold spell from Mother Nature, a solid economic backdrop and a surge in digital spending made for what was likely the best Black Friday Weekend post recession,” he wrote.
The overwhelming consensus was that the weekend’s business was good. Marshal Cohen, chief industry analyst for market research company The NPD Group said he believes that Black Friday business had some weakness.
“Stores were certainly busier than last year, but from what I saw Thanksgiving and Black Friday were a mixed bag this year. The early parts of both days were busy but ongoing store traffic wasn’t stellar, and it wasn’t consistent from store to store, or mall to mall,” he wrote in a Nov. 28 blog.
But the Black Friday weekend is only the first act of the holiday sales story. According to study with NPD’s survey partner, CivicScience, 78 percent of shoppers still have yet to do most of their shopping.
The quality of business for the rest of the holiday season will be shaped by retail traffic, said Jeff Van Sinderen, a retail analyst for B. Riley & Co. Holiday seasons are deeply affected by the lull periods between the frenzy of Black Friday and the fast pace of shopping immediately before Christmas. “The impact that the lull period has on promotions will be critical,” he said.
If retail traffic drops sharply between Black Friday Weekend and a few days before Christmas, retailers will drive stronger promotions. If retail traffic remains steady, promotions and sales won’t go deeper than they already have.
Van Sinderen estimated that promotions were about the same this year as they were in 2016, however it’s not a straight comparison because retailers have changed their game. Supply-chain costs have been renegotiated for many retailers, so they are making garments at lower costs, which means that they are making more margin, even if they do not sell at full price.
He doesn’t forecast big sales after the holiday, noting that retailers are keeping their inventories lean. “Nobody had high expectations,” Van Sinderen said. “They are not sitting on a lot of inventory that they will have to liquidate.”