Cyber Monday May Set Record as US Goes on Buying Binge
Take door-buster specials, add early opening hours, and mix in a good measure of pent-up demand and you have a recipe for a strong start to the holiday shopping season.
And retailers liked it so much, expect to see a version of it — albeit smaller — today, as a record number of shoppers are expected to go online to snag Cyber Monday deals, which at some retailers, began Sunday night.
Black Friday sales are estimated to have risen 6.6 percent from the same time last year, according to ShopperTrak, a Chicago-based company that tracks mall traffic. That estimated $11.4 billion in retail purchases represents the biggest dollar amount ever spent on that day.
The National Retail Federation estimates 226 million shoppers visited stores and websites over the Black Friday weekend, up from 212 million last year.
The survey, which interviewed more than 3,800 adults, reports that the average holiday shoppers spent $398.62 over the Thanksgiving weekend, up from $365.34 last year. Conducted by BIGResearch, the study also found that online spending was significant, with shoppers shelling out an average of $150.53 on the web, or 37.8 percent of their total weekend outlay.
And the spending binge wasn’t isolated to just Friday. The shopping started Thursday, as record number of consumers purchased items on their smartphones and tablets, presumably at the Thanksgiving dinner table, or headed out to early openings at stores such as Toys ‘R Us and Wal-Mart Stores , which didn’t even wait until midnight Friday to begin their Black Friday deals. The shopping should continue today, as record numbers of shoppers are expected to go online seek Cyber Monday deals.
Deal Gap Closing
Cyber Mondayhas become a more significant each year. Retailers embraced it and are offering bigger and bigger discounts online — and more and more shoppers are coming for them. That is what is what makes the event, which initially began as marketing gimmick to promote online shopping, more important each year.
As of 3 pm New York time, Cyber Monday online sales are up 15 percent for this same period over Cyber Monday 2010, according to the IBM Benchmark Alert.
The main reason is the plentiful deals.
According to Dealnews, last year Black Friday had only five percent more deals than Cyber Monday did, a drop of five percent from the prior year. And the deal gap should continue to close.
Retailers are expect to attempt to draw in shoppers online by promoting deals in a record number of promotional emails, said Responsys, a California-based marketing software company that assists retailers such as Brooks Brothers, Lands’ End, LEGO, and Under Armour .
Promotional Emails Up Sharply
“This year an amazing 81 percent of major retailers sent at least one promotional email to their subscribers on Black Friday, making it the busiest promotional email day on record for the time being,” said Chad White, research director for Responsys. “That’s up from 69 percent last year. Black Friday was also preceded by the busiest Thanksgiving Day ever, with 75 percent of retailers sending email. That’s up from 60 percent in 2010 and just 45 percent in 2009.”
"With email volume up 19 percent year-over-year last week, retailers are making email central to their marketing efforts this holiday season,” he said.
After seeing this kind of record email volume, White expects promotional email volume to easily set a new all-time record on Cyber Monday, which has been the busiest email-marketing day of the year for the past four consecutive years.
One reason for this is the growth of the online business. According to research from Deloitte, online has become the No. 1 shopping destination, with almost half of consumers surveyed saying they will most likely shop for gifts online this holiday season — an increase of 13 percent from last year.
Still the main concern is what happens next? If you look at the shopping pattern, consumers were certainly being driven by the discounts, begging the question: Will consumer spending dry up when the big bargains of Thanksgiving weekend end?
Consumers have been conditioned to expect big discounts over the holiday weekend.
Trained to Shop Deals
“Retailers are really figuring out how to juice it for that entire weekend to get people in the stores and online,” said Marshal Cohen, chief industry analyst at market researcher NPD Group. “Basically, the consumers said give us the extra hours and deals and we'll come.”
But Cohen’s worried that the strong Black Friday numbers may overstate the strength of the holiday season.
“We groomed the consumer to wait until now to buy a product,” he said.
The power of those deals was very persuasive. Stores that extended their hours this past weekend gained 22 percent more business, Cohen said.
“That’s market share they’re taking from someone else,” he said. “The stores that didn’t participate in the new extended hours lost on average 8 percent. So what that means is a new tradition is being born right in front of our eyes. Look next year for more stores to participate in these earlier and longer hours.”
Shoppers also are expecting there to be more deals as Christmas draws closer. In the Deloitte survey, 39 percent of all holiday shoppers surveyed say they will likely make their purchases later this holiday season because they expect better promotions.
One for You, Two for Me
Needham analyst Christine Chen said she expects that some of the higher spending came from shoppers who were buying items for themselves on the cheap.
“We think the holidays will be back-end loaded as the event-driven shopper procrastinates and hopes for better deals as Christmas approaches,” Chen said.
Cohen agrees there was a lot of self-gifting. About 44 percent of the shoppers this weekend shopped for themselves, he said. That’s up 12 percent over last year.
Customer Growth Partners President Craig Johnson continues to expect that holiday retail sales will rise 6.5 percent from last year, which would be the best growth since 2006 and is higher than many forecasts, including the retail industry’s own prediction.
Johnson expects consumers will take a breather until the second week of December, which repeats a pattern that has been seen for many years.
Johnson also is very optimistic about the growth of online and direct-to-consumer sales, which he expects will rise between 12 and 15 percent this year.
In fact, Johnson expects ecommerce sales rose so sharply on Thanksgiving itself that that day may rival the Cyber Monday promotions.
And the high-end and luxury consumers, who shun the Black Friday frenzy, will start their shopping this week, Johnson said.
“As always, male luxury shoppers will wait until the last 10 days before Christmas to do their shopping — particularly for jewelry.”
But even Johnson cautions, “One swallow does not a Holiday season make. After the deepest Recession in decades, the solid Black Friday weekend is welcome news — but we’re only in the second quarter of a long playoff game.”