Thanksgiving day shoppers are expected to drop a record amount of money online, as consumers face a compressed holiday shopping season.
Early data released by Adobe showed online retail sales on Thursday will reach a record of $4.4 billion. That represents a 18.9% year-over-year increase from last year's sales total of $3.7 billion. So far, $2.2 billion in goods have been sold online, according to Adobe, with nearly half of those sales coming from mobile devices.
Sales of that magnitude would come a day before Black Friday, which has traditionally kicked off the holiday shopping season. Shoppers face an abbreviated holiday shopping season compared to 2018. This year's Thanksgiving holiday happened one week after last year's, shortening the season by six days.
"The strong online sales performance to-date suggests that holiday shopping starts much earlier than ever before," said Jason Woosley, vice president of commerce product and platform at Adobe, in a statement.
He also pointed out that online sales between Nov. 1 and Nov. 27 are up 16.1% from the year-earlier period as "steep discounts on popular items like computers on the day before Thanksgiving indicate that many of the season's best deals are already up for grabs."
Still, Adobe expects Black Friday sales to reach $7.5 billion this year. That would represent a gain of 20.5% from 2018. Cyber Monday sales are also forecast to grow by nearly 20% to $9.4 billion.
"What will be important for retailers to track is whether the early discounts will drive continued retail growth overall, or if they have induced consumers to spend their holiday budgets earlier," Woosley said.
Online sales have become increasingly important for retailers in recent years as consumer trends have shifted from shopping at physical stores to buying products from their phones or computers. Companies such as Amazon, Walmart and Target have benefited from this shift.
Amazon — a perennial darling on Wall Street — is up 21.1% this year while Walmart and Target have surged 27.5% and 90.5%, respectively. Others such as Kohl's, Gap and Macy's have struggled as shopping continues to move away from brick-and-mortar retailers in favor of online shopping. Year to date, Kohl's shares are down 27.2% while Gap's stock has shed 34.4% of its value. Macy's is the worst-performing stock in the S&P 500 in 2019, plunging 48%.
The strong early indications, however, bode well for the broader retail sector as they go deeper into the holiday shopping season. They also show the U.S. consumer is still doing well.
Consumer strength has been a linchpin for the U.S. economy as the U.S.-China trade war rages on while overseas growth slows down. In the third quarter, consumer spending grew by 2.9% as overall GDP expanded by 2.1%. Consumer confidence is also near historic highs despite a slight drop this month.