Consumers Keep Up Spending Spree on Cyber Monday
Sixty percent of employers may have taken steps to actively prevent workers from placing orders on websites yesterday, but that did little to prevent a record-setting Cyber Monday for online sales.
Cyber Monday sales were up 15 to 18 percent over last year, depending on the source. Not bad for an event that was only recently created by the retail industry.
Also not bad is the level at which consumers have been spending online to kick off the holiday season. Dollar sales for Thanksgiving showed an increase of 18 percent over last year and Black Friday was up 26 percent, according to comScore.
"Retailers are doing a good job of creating more excitement online in ways they can’t do in store," Sherif Mityas, a partner in the retail practice of A.T. Kearney, told The Associated Press. "They’re creating that excitement of, ‘I’ve got to get that special deal,’ that is really spurring traffic."
Matt Shay, CEO of the National Retail Federation, told USA Today that Cyber Monday’s numbers combined with those already produced since Thanksgiving were "providing a needed shot in the arm to our nascent recovery."
- Cyber Monday online retail sales up 15% from 2010 – The Associated Press/San Francisco Chronicle
- Buyers click away as Cyber Monday sales jump 18% – USA Today
- Thanksgiving Sales Set Record as Shoppers With Jobs Chase Bargains: Retail – Bloomberg News
- Black Friday Boasts $816 Million in U.S. Online Holiday Spending, Up 26 Percent vs. Year Ago – comScore
- Ho! Ho! Ho! Watch the online shopping while at work – South Florida Sun-Sentinel
Discussion Questions
Discussion Questions: What is your take on the online sales numbers to start the holiday season? Do you see the large year-over-year increases as a bellwether?
The apparently strong results on Cyber Monday show three trends at work:
1. Consumer spending is in a genuine recovery mode. The numbers have been modestly stronger than the “sentiment” all year, but the past five days show evidence of stronger demand.
2. E-commerce and multichannel retailers are getting a lot smarter about pitching online “doorbusters” and connecting with shoppers multiple times during the day.
3. It’s harder for employers to control online shopping at the workplace when a huge number of employees have handheld computers (aka smartphones) within reach.
The best news for retailers is that the holiday shopping season appears to have a tailwind. We will encounter the usual post-Thanksgiving lull, but many stores will report healthy comp sales later this week.
The glass half full says consumers are spending because they’re optimistic. The glass half empty says they’re buying on sale so they can stretch fewer total dollars.
The realist says 16% of Americans are living below the poverty line and another 15% are close to it. The jobless rate remains stagnant. The gap between rich and poor hasn’t been higher in more than 100 years. Inflationary pressures on food and fuel remain persistent and American corporations aren’t investing domestically.
In other words, there are plenty more accurate indicators of consumer condition and sentiment out there than this one anomalous weekend before the holidays.
I think it’s safe to say shoppers are finding it increasingly easier to purchase online rather than face crowds of frenzied pepper-spraying consumer commandos prepared to fight for the right to discover that after two weeks of camping in front of the store they didn’t get one of the two television sets advertised in one of those cute “limited number of advertised items available” promotions.
Online shopping — at least when dealing with established retailers — is just a smarter alternative in many cases. Availability is essentially guaranteed. Service is generally good. Price comparison is easy. And, there’s no pepper spray!
What’s not to like?
The early push to online signals that shoppers are savvy about online’s drawbacks — the perishability of certain offers; issues associated with shipping/delivery, etc.
The real question ought to be when are the rest of the shoppers going to catch on and — when they do — what will physical retailers do with Black Friday?
The only sure indicator here is that more and more customers are using the internet to buy products. Black Friday and Cyber Monday are indicators that the consuming public likes deals. I think it a bit premature to announce a turnaround.
It’s hard to say with accuracy whether the sales numbers of the past few days are indicative of economic recovery. What I think we can absolutely confirm is that this is the first year we’re really starting to see the results of a shift in shopping behavior. Behold the savvy shopper! With the rise in mobile shopping, social shopping, private label shopping and deal-seekers I believe the average Americans shopping behavior is forever changed.
The news about the increase in sales online and offline for Black Friday, over the weekend, and Cyber Monday is very strong. What it means is more of a problem. Are consumers planning to spend more or did they use the sales to extend their budget? Which consumers were shopping? Will they continue to shop for the rest of the season? Are consumers paying cash or going back in debt? Watching sales for the rest of the season will help answer some of the questions.
The economic numbers and the shopping statistics seem to be in complete opposition to each other. Apparently the people that are still working are feeling a little better about things and are increasing spending. That Internet sales are improving should be expected if for no other reason than the continued expansion of online capabilities.
Freud said, “Sometimes a pipe is just a pipe” when talking about oral fixation. Sometimes, good news about shopper behavior is just good news. This is that time.
Is a 6% or even 15% increase over the absolute worst sales history in decades (relatively speaking) really anything to get excited about? Sure it’s an increase which is better than a decrease, but is it significant? Where did the sales come from? Were they actually new sales or were they cannibalized sales that came from retail? Now for the biggest question – were the sales profitable? You can increase sales 200% and if they aren’t profitable you just go broke faster. I guess time will tell as the press never seems to look beyond the headline they create to sell their particular point of view.
Given the Black Friday and Cyber Monday results, I think there’s good reason to feel optimistic about Christmas sales this year. While there’s more hype every year about both Black Friday and Cyber Monday, it’s hard to attribute the size of this year’s increases to hype and publicity.
That said, I don’t think we’re going to end up seeing double-digit increases for the season, so let’s pump the brakes a bit. I’m still advising my clients to remain prudent and guard against giving back December profits with January markdowns by being too aggressive with inventory levels.
Both Black Friday and Cyber Monday have demonstrated that online is where it’s at…and where it’s continuing to go. Digital media, including mobile, allows consumers to exist at the center of the shopping cycle, and make the process more efficient for themselves.
Marketers should look to these new forms of nontraditional marketing as opportunities to think outside of the box, and capitalize on the advantage of reaching consumers, in-store on their mobile devices.
In terms of overall spending, that’s an economic issue, and here’s hoping spending continues to increase, year over year. But online spending, especially, will increase as people search more for deals and gain autonomy.
The large year-over-year increases in online sales is a bellwether that the consumer has consistently been letting merchants, who are listening, know about — they will shop and then spend more online. This should not be confused with an expectation that overall holiday sales will be showing similar year-over-year increases.
In the BIGinsight September, 2011 Consumer Intentions & Actions (CIA) survey, fully 19.7% of respondents said that they “planned to shop the Internet MORE in the next 90 days – September, October, November – than this time last year”. That figure was up from 15.9% in September, 2010, and 13.7% in 2009.
The even happier news for online activities for retailers lies in the fact that in the October, 2011 CIA survey, 27.7% of respondents said that they would shop online MORE than this time last year over the following 90 days — October, November and December.
For merchants with a sound online strategy, the numbers will bring a smile from year end bonuses. The overall sales numbers for holiday spend, however, will still likely fall to less than +3%.
Given the general concern about a downside surprise, I think the news deserves more than a sigh of relief. It’s good news for retailers, and for those of us whose livelihoods depend on retailers. Yes, all is not perfect in the economy, but let’s be at least a little bit happy!
I see it as increased transactional comfort with the online channel. Looking forward to November comps. We are a long way from Christmas.
Recession? What recession?! This spending will only continue to grow year-over-year. The interesting aspect is what percentage is credit versus cash/debit compared to past years. Credit cards are a bit more difficult to secure these days, so perhaps it’s a good thing if consumers are paying with debit cards. Perhaps.