The first two days of the holiday sales season have underlined the growing dominance of online purchases. This year’s brick and mortar sales fell marginally as online sales led the charge.
This reveals the declining importance of what was earlier viewed as a key period for retail sales at conventional stores. In contrast, online purchases soared as more and more customers decided to beat the in-store rush and buy from the comfort of their homes.
Early Black Friday Discounts Ignored
The Thanksgiving weekend witnessed a decline in sales at brick and mortar stores. Despite an all-out attempt to attract shoppers, most early Black Friday discounts were met with indifference. Deals included a buy one and receive the next at half the price offer on Star Wars toys at Target Corp. TGT and quadcopter drones at a $200 discount from Best Buy Co. BBY. Wal-Mart Stores Inc. WMT was offering a 50-inch Samsung smart TV for $500.
However, customers remained unmoved by these offers. Crowds at brick and mortar outlets were thin early on Thanksgiving Day. The situation was not bad for all stores, with Toys R Us witnessing a large queue at its Times Square outlet in New York.
Brick and Mortar Loses Ground
The brick and mortar decline was reflected by data released for the Thanksgiving sales weekend as a whole. According to analytics agency RetailNext, sales for both Thanksgiving and Black Friday have declined by 1.5%. Average expenditure per customer declined by 1.4%. While customer traffic remained unchanged compared to last year on Thanksgiving Day, the figure declined by 1.8% on Black Friday.
Data from ShopperTrak shows a marginal year-on-year decline in sales from $12.29 billion recorded during the same period last year to $12.1 billion. However, the firm refused to provide a figure for percentage decline since it has changed its methodology for these calculations since last year.
The overall trend indicated two crucial factors influencing retail sales. First, consumers have decided to avoid the Black Friday mayhem and take advantage of pre-holiday sales offers. Second, a large chunk of purchases has moved to the online domain.
Online Purchases Surge
According to data from Adobe Systems Inc. ADBE, online purchases touched the $4.45 billion mark during Thanksgiving and Black Friday. While sales worth $1.73 billion were made on Thanksgiving, $2.72 billion was spent online on Black Friday. This represents year-on-year increases of 25% and 14%, respectively. Also, the value of an average order rose 9% to $162 on Thanksgiving, while it declined by 2% to $141 on Black Friday.
Mobile shopping made up 34% of all online purchases. Of these smartphones generated the lion’s share, hitting a new record of 22% of sales. This represents a massive 70% increase over last year.
Multiple Channel Strategy Crucial
There is little doubt about the fact that footfall at brick and mortar stores have declined. Sales at these outlets have received negative publicity because of fights breaking out during this period. Meanwhile, shoppers have also responded to the criticism about stores getting employees to work on such holidays.
Data from Channel Advisor revealed an interesting trend. While eBay Inc. EBAY and Amazon.com, Inc. AMZN performed creditably, retailers using multiple sales channels also met with substantial success. These companies, which are being called omnichannel players, utilized their brick and mortar stores and online promotions to push sales.
The likes of Best Buy and Sears Holdings Corp. SHLD successfully integrated physical presence and online outreach to boost sales. This is probably one of the reasons why industry watchers believe that numbers were not as bad as they look, following a tough summer and weak sales in October. Going forward, the online-physical integration is likely to be the preferred strategy of the brick and mortar segment.
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