U.S. retailers are hoping consumers' growing shift to online shopping will carry Black Friday's spending momentum through this week, which kicked off with Internet-only deals and discounts on yesterday's "Cyber Monday."
The Monday after Thanksgiving in the past few years has evolved into one of the biggest online shopping days of the year. The number of Cyber Monday shoppers has almost doubled in the past five years, from 59 million in 2005 to an estimated 106.9 million in 2010, according to the National Retail Federation (NRF).
Last year, shoppers spent $887 million on Cyber Monday, according to research firm comScore Inc. (Nasdaq: SCOR), and analysts expect a higher turnout this year.
About 212 million shippers visited stores and Web sites during Black Friday weekend (Thursday – Sunday), up 10% from 195 million shoppers in 2009. The average shopper spent $365.34 this year, 6.4% higher than last year's $343.31, with total spending this past weekend estimated at $45 billion.
"Consumers are more comfortable spending again, and that trend has held up," Maggie Taylor, a vice president at Moody's Investors Service (NYSE: MCO) told Bloomberg. "I don't think people are as worried about losing their jobs anymore."
The number of consumers who started Black Friday shopping at midnight – both online and in stores – tripled to 9.5% this year, and the number of Thanksgiving Day shoppers doubled from five years ago to 22.3 million.
Some were expecting higher numbers for Black Friday, but experts say promotions that started earlier in the month cut into Thanksgiving weekend results.
"Retailers were very conscious of driving traffic early in November and in doing so, some might have thinned Black Friday a bit," said Bill Martin, founder of Chicago-based retail firm ShopperTrak.
The results of early November sales show that shopping is up and Black Friday results could have been even higher if retailers hadn't offered discounts sooner. Sales and traffic for the first two weeks of the month were up 6.1% and 6.2% respectively from November 2009.
"The earlier retail promotions begin to diminish the importance of Black Friday in terms of a year over year comparison of the specific day," Laura Gurski, the global head of the retail practice at consulting firm A.T. Kearney, told The New York Times. "As the retailer's strategy has changed, so has the consumer's behavior, right along with it."
This weekend's results showed that consumers are not just looking for the best holiday gift deals this season, but are also looking to spend some on themselves. More men than in years' past were shopping for electronics, and more women for jewelry and home furnishings.
"This demonstrates a consumer that is value focused [...] but open to buying for oneself and putting away an additional gift in the basket for a family member or friend," wrote retail analyst Brian Sozzi of Wall Street Strategies in a note. "The holiday season is no longer black Friday or bust, it's really becoming Black November."
Shoppers were also willing to spend more on discretionary items, giving a holiday boost to luxury stocks like Tiffany & Co. (NYSE: TIF). The percentage of shoppers who made jewelry purchases over the weekend rose to 14.3% from 11.7% last year.
While in-store traffic this Black Friday didn't grow as much as some retailers had hoped, online sales on Black Friday alone increased 9% from last year, according to comScore. Online purchases totaled $648 million, making Black Friday the biggest online spending day so far this year. About 33.6% of weekend shoppers bought online – the highest ever percentage.
"E-Commerce data for Thanksgiving day and Black Friday show a noticeable pick-up in online sales, setting the stage for a promising Cyber Monday and holiday season," wrote analyst Youssef Squali of Jefferies & Co. (NYSE: JEF).
Amazon.com was the most popular site and its shares hit an all-time high Monday after jumping 5.38% last Wednesday in anticipation of the hot holiday shopping weekend. Amazon.com hit a high of $181.84 in Monday morning trading, pushing Amazon.com up 35% this year.
Typically the holiday sales boost continues into December, as about half of the industry's sales are usually made in the last 10 days before Christmas. Retailers were hoping Cyber Monday would continue the Black Friday shopping frenzy.
Some online retailers, like eBags.com, Drugstore.com Inc. (Nasdaq: DSCM) and Diapers.com were offering specific Cyber Monday deals, while others like Wal-Mart are enforcing Cyber Monday deals all week. Cyber Monday deals have improved over the years as the shopping "holiday" has become more popular.
"[Cyber Monday] was, without a doubt, overhyped for the first several years," Brad Wilson, founder and editor-in-chief of BradsDeals.com, told CNNMoney. "Just in the last year, maybe two, I've seen it get much better from a consumer standpoint. You can name any online store and they are doing their largest coupon of the holiday season."
According to Wilson there were 60.5% more online coupons for this year's Cyber Monday than last year.
The growing tradition of Cyber Monday has led some employers to accommodate their bargain-hunting employees by allowing access to certain Web sites during lunch hours and limiting access during the rest of the workday. The NRF estimates about 70 million Americans will shop from their jobs this year.
But for those who will miss Cyber Monday deals, experts don't expect the discounts to disappear as the holidays near, and some say merchants could lower prices even more. U.S. retailers are pressured by cost-conscious consumers armed with smartphones to do in-store price comparisons.
Experts think this year's Black Friday and Cyber Monday results are showing signs of a consumer more willing to spend, and retailers are pulling out all the stops to get in front of shoppers.
"While Black Friday weekend is not always an indicator of holiday season performance, retailers should be encouraged that a focus on value and discretionary gifts has shoppers in the spirit to spend," said NRF President Matthew Shay. "As retailers look ahead to the first few weeks of December, it will be important for them to keep momentum going with savings and incentives that holiday shoppers simply can't pass up."
A better picture of how this year's holiday sales are shaping up can be formed Thursday when companies report November sales at stores open at least a year.
News and Related Story Links:
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- Money Morning:
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- The New York Times:
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