Mobile Wednesday Steals Thunder of Black Friday

Online sales on Thanksgiving and Black Friday surged by about 18% to $5.27 billion

Retail trends over the last few days show that the traditional shopping on Black Friday is slowly fading into extinction as more and more consumers take to online shopping in a big way, lured by massive discounts and the convenience of shopping at home from their mobile devices, as reported by Bloomberg on November 26th, 2016. As expected, e-commerce orders surged on Thanksgiving, November 24th, 2016, the day before Black Friday, doing away with the need for shoppers to wait in queues and fight for deals at physical shops. For consumers who did want to visit shopping centers, many stores were offering deals on Thursday evening.

Interestingly, a new trend witnessed in 2016 was that Thanksgiving eve is also fast turning into a major shopping day. On Wednesday, November 23rd, 2016, three times as many people were browsing online at retail sites compared with a year ago, according to Rakuten and as reported by Bloomberg. This comes after eBay Inc. (NASDAQ: EBAY) requested customers to start shopping on their phones that day, giving the event the name “Mobile Wednesday.”

According to Adobe Digital Index, online sales on Thanksgiving and Black Friday combined surged by about 18% to $5.27 billion, higher than the prior estimate of $5.05 billion. Consequently, consumer visits to physical stores those two days fell 1% from a year earlier, according to ShopperTrak. Black Friday sales rose 21.6% to $3.34 billion, with purchases made on mobile devices contributing roughly $1.2 billion in revenue, a 33% surge from a year earlier, and both record sales for the day, according to Adobe. Black Friday store traffic is down 3% to 4%, while online traffic is up 20%, mostly on mobile devices.

Source: EMarketer, Bloomberg
Source: EMarketer, Bloomberg

Retailers lure shoppers with deeper discounts

Wal-Mart Stores Inc. (NYSE: WMT) and other chains are enticing customers with Black Friday specials at supercenters as well as various online promotions called “Cyber Week.” The world’s largest retailer has tripled its e-commerce selection to 23 million products to better compete with rival Inc. (NASDAQ: AMZN). Wal-Mart said that Thanksgiving was one of its top online-shopping days this year, with about 70% of traffic to its website coming from mobile devices. Wal-Mart is also offering average discounts of 39% versus 35% in 2015.

Apart from Wal-Mart, big-box U.S. retailers such as The Kroger Co. (NYSE: KR), Costco Wholesale Corp. (NASDAQ: COST), Target Corp. (NYSE: TGT), Macy’s Inc. (NYSE:M), Best Buy Co. Inc. (NYSE: BBY), and Lowe’s Companies Inc. (NYSE: LOW) are counting on heavier discounts and a bigger online selection to help keep up with this holiday season. Target offered discounts of 38% versus 36% last year and 15% off on almost everything in its stores and website for Sunday and Monday (November 27th and 28th, 2016). The retailer also saw double-digit growth on its website on Thanksgiving, driven by deals on electronics like televisions and Apple products.

Retail behemoth stated that mobile orders on Thanksgiving topped last year’s holiday and Cyber Monday combined, driven by items such as Instant Pot cookers, Hasbro Inc.’s (NASDAQ: HAS) Pie Face game and Amazon’s Alexa devices. Some retail chains have resorted to lottery-type offerings to lure shoppers to stores. The J.C. Penney Co. (NYSE: JCP) gave away $500 coupons, while The Gap Inc.’s (NYSE: GPS) Old Navy touted the chance to win $100,000.

Source: Market Track, Bloomberg
Source: Market Track, Bloomberg

Macy’s online sales hit by website issues

Omni-channel retailer Macy’s Inc. (NYSE: M) suffered a setback on Black Friday after its website crumbled under the heavy online traffic. Some visitors to were directed to a page citing “heavier traffic than normal,” with a countdown clock telling shoppers when they could return to the main site. This dealt a blow to its plans to drive profitable growth, something that the company has been working on to fight a plunge in store traffic over the past year. In August 2016, Macy’s announced that it will close about 100 of its stores by early 2017, while still maintaining a significant bricks-and-mortar presence in 49 of the top 50 U.S. markets.

Macy’s shutting down of its brick-and-mortar locations has put more pressure on its e-commerce site to deliver sales. To add to its woes, Macy’s customers also encountered delays on the retailer’s mobile site.

Apart from Macy’s, other retailers also faced technical problems owing to the deluge of traffic from customers accessing websites through mobile devices. The website for Victoria’s Secret, owned by L Brands Inc. (NYSE: LB), suffered delays as well, with customers getting less patient with mobile load times. The sweet spot for mobile sites, which is the ideal load time to prevent cart abandonment, will be 2 seconds or less this year, down from 2.4 seconds in 2015, according to SOASTA Inc., a load testing and performance monitoring company.

Outlook for holiday season: retail sales to grow at faster pace

The National Retail Federation (NRF) estimates that about 137.4 million consumers will make purchases in stores or online over the four-day weekend that started on Thanksgiving. However, spending has declined 26% from 2013 to an average of $299.60 per person in 2015, implying that holiday purchases are spreading out over a longer period of time. Spending during November and December 2016 is expected to grow 3.6% to $655.8 billion, excluding autos, gas and restaurant sales, according to NRF.

U.S. retail sales are predicted to grow at a faster pace than last year, fueled by rising wages and a stronger job market. Sales climbed 3.2% in 2015, and the seven-year average since the recession ended in 2009 is 3.4%, as per NRF. Non-store sales may increase 7% to 10% in 2016, reaching as much as $117 billion. Online sales are forecast to account for about 90% of non-store sales.

Source: NRF, Bloomberg
Source: NRF, Bloomberg

Overall, NRF predicts that consumers seeing steady job and income gains throughout the year has resulted in continued confidence and greater use of credit, which bodes well for more spending throughout the holiday season.

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