Shoppers walk past a store promotion during the Black Friday sales in Los Angeles, California on … [+]
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It’s still early days of the final holiday retail push, but early results point to who’s going to win big – e-commerce and omni-channel retailers with strong mobile platforms – and lose – physical retailers dependent on in-store traffic – through the rest of the month.
E-commerce retailers killed it this Black Friday, with digital sales up nearly 20% to reach $7.4 billion across the 4,500 retail websites that Adobe Analytics tracks. It became the second largest online shopping day in history, only eclipsed by Cyber Monday last year when $7.9 billion in sales were done.
This year Adobe predicts Cyber Monday 2019 will blow last year out of the water to the tune of $9.4 billion in sales, a nearly 20% increase.
Not only did consumers shop more online, but they also sidestepped the wait for delivery in record numbers, driving a 43% uptick in Buy-Online-Pickup-In-Store (BOPIS) orders, a sign the company said of retailers “successfully bridging online and offline retail operations.”
Average order value for the online retailers tracked also showed a boost, up 6% to $168, as Adobe remarked, “consumers got more comfortable buying more and bigger ticket items online.”
By comparison, things were not so sunny at the malls or shopping centers this past Friday. RetailNext provided an early look at in-store shopping activity across tens of thousand of stores operating under its RetailNext smart-store platform.
The results: traffic was down 2.1%, average transaction values dropped 6.7%, and overall sales declined 1.6%.
On the plus side, the company found conversions, or the percentage of shoppers visiting a store who made a purchase, rose 1.7%. This reporting includes a wide range of retail segments, including specialty apparel, large format big-boxes, mall-based, and standalone stores.
A Saturday morning research report from Cowen’s Oliver Chen reinforced these findings, calling this year’s Black Friday calm, as in-store traffic continued to trend negative.
While Chen foresees online growth this holiday in the 20-30% range, he is much more conservative overall, expecting the holidays to result in a modest 2-3% uptick, well off National Retail Federation’s 3.8%-4.2% prediction.
“Our belief is that weak season-to-date traffic, difficult weather trends, and a shorter holiday calendar could collectively be an overhang to holiday spending,” he writes, and adds, “We believe the consumer remains strong given low levels of unemployment and rising wages, however, we do not believe this dynamic is benefiting all companies equally.”
Among the retailers best positioned to benefit this holiday season are Walmart and Target, thanks to the strength of their omni-channel strategies, wide product assortments, strong mobile shopping platforms, and BOPIS offerings.
On the other hand, “North American department stores, mall-based retailers, those retailers with store closures underway, and retailers that are more promotional this year vs. last year are at most risk of underperforming this holiday season,” the note states. In other words, just about every other retailer.
Chen expects Nordstrom to be an exception, thanks to more in-store traffic this year and keen consumer interest shown in its footwear and men’s apparel offerings. “We believe promotions remain in-line with last year, and we are encouraged to see higher consumer engagement across various departments fueled by special deals and strong product assortment,” Chen writes.
In Cowen’s analysis, “promotion commotion” is rampant this year, given fairly high inventory levels across the retailers it tracks. For example, Michael Kors was offering discounts up to 70% off, as compared with hefty 50% off discounts last year. Coach was discounting 50% on selected best-selling items with online discounts of 30% off on select styles. Kate Spade offered up to 70% discounts on select styles too. This level of discounting seems particularly desperate for these luxury brands.
Not to be outdone in the discount department were Gap and Banana Republic, both offering 50% discounts on all items in-store and online. Macy’s, American Eagle, Sephora, Ulta, Bath and Body Works, and Victoria’s Secret were more selective in their discounting, but each offered attractive door-buster sales on select items.
In the final analysis, Cowen’s Chen sees Walmart, Target and Nordstrom best positioned for strong holiday sales, but advises “caution” for Gap, Macy’s and Kohl’s, mainly as a result of their heavy dependence on women’s apparel. “We expect women’s apparel to be a continued problem spot given no new trends, inventory hangover risk, and the difficulty in captivating a younger shopper,” the note states.
The compressed holiday shopping season this year will put pressure on all retailers, with online retailers needing to front load their sales to allow for shipping times.
On the other hand, well-positioned omni-channel retailers, like Walmart, Target, and Nordstrom and select others, will benefit as the short holiday season advances, particularly those that have mastered BOPIS service powered by dynamic mobile shopping experiences, which could account for more than half of all digital traffic this year.