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Retail Pins Hope on Cyber Monday After Lackluster Weekend Footfall

All eyes have turned to Monday.

After a ho-hum Black Friday for in-store selling, retailers are gearing up for what they hope will be the biggest online shopping day for the year. Some fear, however, it still might not be enough for the fashion and soft home textiles categories.

Target Corp. is planning a two-day Cyber Monday sales event starting on Sunday, featuring deep savings of up to 50 percent off on “hundreds of thousands of items” that include televisions, laptops, apparel and toys, the mass discounter said on Friday. The retailer also said shoppers can expect new deals each week in-store and online throughout December. Top deals cited include kids’ apparel at up to 50 percent off, matching family sleepwear at 30 percent off and bedding and bath at up to 40 percent off.

Other retailers, such as Kohl’s Corp. and women’s specialty chain Talbots sent out e-mails to customers pitching advance access to Cyber Monday deals. Johnston & Murphy also touted a Cyber Monday preview sale on Sunday. And women’s intimates brand Third Love told customers in an e-mail that discounts were up to 70 percent off everything, plus an extra 25 percent deduction and a $20 credit on orders totaling $150 and up.

Robert Handfield, Bank of America University Distinguished Professor of Supply Chain Management and executive director of the Supply Chain Resource Cooperative, believes promotions “will be going on through the end of the year….There is a surplus of inventory for retailers and for manufacturers.” And with credit card use rising, as well as higher borrowing rates, he said shoppers will be hunting for discounts.

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Retail consultant Gabriella Santaniello of A Line Partners said the Black Friday and weekend sales this year failed to include the “mad rush” to the stores as soon as soon as they opened as in pre-pandemic years.

Santaniello said she was at the three-level Del Amo Fashion Center mall in Torrance, Calif. on Saturday at about 11:00 a.m.. “Saturday was kind of a dud. My checkers and I were going back and forth comparing notes. The mall was wide open. I easily pulled into a spot in the parking lot that was four spots from the Nordstrom entrance. That’s crazy,” she said.

Santaniello peeked into some of the bags shoppers were carrying and even asked some what they bought. “It was shocking to me that a teenage girl is going to go to Aerie and she’s going to buy one sweatshirt. She’s not buying multiples. There was a lot of that, which is not the norm,” she said.

Other channel checks on the West Coast provided a similar assessment.

South Coast Plaza, the area’s largest shopping center, nabbed some early-bird shoppers when its doors opened at 9 a.m. on Friday, although the foot traffic could hardly be described as frenzied.   

“We’re ready to do it,” said one Macy’s beauty counter employee clapping her hands together as she rallied her nearby co-worker.  

Thirty percent off products from Drybar, Philosophy and Bare Minerals got the attention of a few shoppers, while—one level below—at the store’s women’s department a line more than 10 people deep consisted of shoppers holding mostly single items of a blouse or dress.   

Stores garnering crowds within the first hour of the Costa Mesa, Calif. mall’s opening enticed with big deals: up to $250 off at Apple, 40 percent off select items at Zara and 40 percent off storewide at Gap and Abercrombie & Fitch. Uniqlo wooed customers with free boxes of organic green tea from Yamamotoyama staged at its entrance as markdowns on puffer vests and fleece jackets drew customers further into the store.  

In South Coast Plaza’s luxury wing, Louis Vuitton saw a healthy dose of shoppers within the first hour of opening as employees stood outside the entrance to check visitors in with iPads.  

Saturday appeared to be business as usual for most though, with malls throughout Orange and Los Angeles counties opening at the typical 10 a.m. Visits to shopping centers seemed to be more about getting out of the house over the long holiday weekend and less about the frantic rush to check off gift lists or bargain hunt as in years past. Perusing racks and folding tables of clothes without having to navigate around other shoppers and parking without having to circle a structure multiple times was the norm.  

Visitors at The Grove in Los Angeles seemed more interested in people watching while sipping coffee and juice, or having a late breakfast. The Caruso-owned property is home to a curated mix of brands such as Athletic Propulsion Labs, Charlotte Tilbury, Maje, Sandro, Frame, Aritzia and Nike.  

Those most in the mood to shop were in stores such as Nike, Sephora and Nordstrom, while families with small children queued up to see Santa.  

Taubman Centers’ Beverly Center, located about a mile away from The Grove, was relatively quiet Saturday morning and most of the afternoon. Visitors were shopping for themselves at fast fashion retailers such as Zara, H&M and Forever 21.  

Bored employees could be seen heads down, scrolling through their phones in empty stores. Meanwhile, visitors took advantage of public seating areas to leisurely check their phones or enjoy coffee.

Traffic was similar to any other weekend at the South Coast Plaza in Costa Mesa, Calif.

Adobe Analytics data indicate that consumers spent a record $5.29 billion on Thanksgiving Day, with mobile shopping driving 55 percent of online sales. Consumers spent a record $9.12 billion online on Black Friday, up 2.3 percent year-over-year, with purchases of electronics the major growth driver followed by toys.

Adobe projects another $4.52 billion was spent on Small Business Saturday and $4.99 billion on Sunday to round out the holiday weekend. Cyber Monday is expected to be the season’s biggest online shopping day, reaching $11.2 billion in sales, or up 5.1 percent year-over-year. It expects the total spend for the five days from Thanksgiving Day through Cyber Monday to generate $34.8 billion in online spend, up 2.8 percent year-over-year.

The data firm projects discounts over the weekend for apparel at 17 percent off list price, toys discounted up to 33 percent, and sporting goods at 19 percent. In addition, curbside pickup was used in 13 percent of all online orders on Black Friday, down from 21 percent in 2021, while “buy now pay later” orders rose 78 percent for the week of Nov. 19-25 when compared with the prior week. “BNPL revenue is up a significant 81 percent in the same period,” Adobe said.

Global commerce media company Criteo said online transactions rose 4.8 percent from year-ago levels, based on data from this year’s Black Friday across 5,400 retailers in 60 countries.

Retail credit analyst David Silverman, senior director, corporates, at Fitch Ratings, said holiday sales this year are likely to be more in line with 2019’s pre-Covid selling patterns.

In 2019, concern over the Trump administration’s stance on tariffs and its impact on higher prices for apparel and footwear led retailers to blast out early holiday promotions. This year, shoppers here and overseas have become more discerning in how they spend their hard-earned dollars due to rising costs of living.

“Structurally, the last couple of years have been very strange, and so very difficult to compare against,” Silverman said. “I think that shopping in person as a leisure activity is in decline. So conversion rates have been moving up from that standpoint, but that’s somewhat mitigated by the fact that [the store] could be part of the overall customer journey where they shop in person but then buy it online, or look online and convert in the store.”

He also expects market share to shift as consumers “flip their purchases” from apparel last year to focus on services this year, such as travel and entertainment. In addition, last year there were limited promotions because inventory levels were low due to supply chain disruptions. In contrast, consumers are aware that inventory levels this year are high, and the expectation is that “retailers will need to restart promotions that could kick into a promotional environment that will look a lot more like 2018 or 2019,” he said.

While even steeper promotions that are likely to start in the last two weeks of December will place further strain on retail margins, the credit analyst said most retailers probably won’t have to worry about credit ratings downgrades.

“We recognize that our companies are in cyclical sectors that are now being impacted by changes in consumer spending,” he said. “Some of these companies just bought too much inventory and need to clear it out. We recognize that some of the businesses may show weaker metrics [and] will continue to show them for the next four quarters, but our job is to look at what the company could do longer term and the potential rebound of that.”

James Gellert, CEO of RapidRatings, which focuses on supply chain and third-party vendor risk, believes more supply chain stress could be forthcoming: “A giant concern for 2023 is companies’ abilities to weather the economic and capital market storms we’re in now.  We’re in for more volatility for the next 24 months.”

According to Gellert, with capital either harder to get or becoming more expensive, that could lead to less stable supply chains in general. And he notes that while easy credit a few years back gave some companies liquidity on their balance sheets, that doesn’t mean these firms are strong operationally.

“For big retailers that have been pushing their suppliers for more inventory, they run the risk that many suppliers are now facing a perfect storm of higher costs of capital, impending capital needs, less access to capital and rising labor and [input] costs that they cannot pass through.  Something has to give,” Gellert said.

The National Retail Federation, a retail trade group, is slated to disclose its sales results data for Black Friday and the holiday weekend on Tuesday.