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Strong Thanksgiving Shopping Spills Over into Black Friday Set to Bring in $7.4B Online

Thanksgiving got the holiday retail season off to a healthy start as more shoppers trawled e-commerce sites from their couches after dinner and some–namely, Gen Z and millennials–headed out to the malls for social hour.

According to data from Adobe Analytics, more shoppers are buying on their smartphones. Consumers this year spent $4.2 billion on Thanksgiving, marking a year-over-year increase of 14.5 percent and the first time the feast day’s sales passed the $4 billion mark. Adobe said e-commerce giants saw a 244 percent boost in sales on Thanksgiving Day and almost half of those sales–at 44.9 percent–were from mobile, representing a 24.4 percent increase from a year ago.

Black Friday sales were on track to hit $7.4 billion, with $600 million already spent online by 9 a.m. EST, Adobe added. Cyber Monday sales are expected to hit a new record with $9.4 billion in sales, or an 18 percent increased from last year. Total U.S. online sales for the 2019 holiday season, from Nov. 1 through Dec. 31, are projected to rise 14.1 percent to $143.7 billion.

According to a report from Salesforce, U.S. digital sales grew 17 percent to $4.1 billion, while mobile sales soared to 60 percent of all digital orders on Thanksgiving Day. Despite that strong start, Salesforce believes many shoppers are still holding out for Cyber Week deals, noting that “global digital revenue grew 24 percent to $20 billion as shoppers across the globe took part in the early Cyber Week festivities alongside their U.S. peers.”

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Consumers are responding to the new tricks in retail’s toolbox. “Retailers introduced new marketing tactics to drum up demand in advance of Cyber Week this year with brands capitalizing on millennials’ and Gen Z’s thirst for one-of-a-kind inventory,” Rob Garf, Salesforce’s vice president of industry strategy and insights, said, pointing to how basketball brand Spaulding created scarcity with a two-hour flash sale of 30 limited-edition products during its “Holiday Slam” event on Nov. 24. Up-and-coming beauty brand The Ordinary, meanwhile, chose instead to tempt customers with savings and discounts throughout the entire month of November.

Black Friday sales online are on track to hit $7.4 billion. although a new trend suggests Black Friday sales spreading out beyond one day.
A shopper in New York City checks out Black Friday markdowns on Nov. 29, 2019. JASON SZENES/EPA-EFE/Shutterstock

What about brick-and-mortar?

Even with the expected increase in online spending, many shoppers still sought out the brick-and-mortar shopping experience. For the most part, Thursday night traffic was more or less the same as last year at the malls and strip centers. On Black Friday, traffic seemed to trend slightly lower in the early morning hours but built up as the day wore on.

Dana Telsey of Telsey Advisory Group said her team had be on the ground in stores nationwide since 5 p.m. on Thanksgiving. “Most of our team felt traffic was similar to slightly down versus last year, with greater divergence among those with the most and least traffic,” she said. “Traffic was better on Thursday night than Friday morning, but we have seen traffic build as the morning progresses, similar to prior years.”

Due to the early start to promotions and widespread availability of online deals for the past few weeks, “there was less need to wake up early to rush to the stores,” Telsey said. “In addition, inclement weather in the West and Midwest likely had a drag on store traffic, while likely helping online.”

Analysts at NPD have also been at the malls and tweeting about Black Friday.

Marshall Cohen noted that tech is still winning big for Black Friday sales, while toys have been “doing great at Target.” Various NPD analyst tweets indicate that Thursday night was slow at some Target doors, although traffic bounced back in the latter part of Friday morning.  Another analyst tweeted that traffic was slow at a Saks Off 5th store since it opened at 5 a.m. Friday morning, with more workers on the floor than shoppers.

And footwear analyst Matt Powell tweeted: “If you are looking for sneaker deals, head back home. Best deals on brand sites.”

Brent Schoenbaum, a partner in Deloitte’s retail practice group, said was at the Glendale Galleria in Los Angeles Friday morning, which opened at 5 a.m., after visiting Thursday night. “There was a lot of traffic early on Thanksgiving, but the crowds dissipated overnight and Black Friday traffic kicks back in around 7:00 a.m. to 9:00 a.m.,” he said, noting that shoppers were, in fact, buying and walking around with shopping bags.

The early crowds on Thursday night and Friday included a strong turnout of Gen Z and millennials who made the shopping kickoff a social occasion. Schoenbaum described their showing as a “social hour” as they hung out at the mall, either shopping Thursday night or enjoying a beverage early Friday morning as they planned where they wanted to go before some stores even opened.

While most stores had similar deals online and in the stores, some dangled the traditional doorbusters on Black Friday, most typically as a limited-time promotion, said Schoenbaum, who expects apparel and accessories to do well as the holidays’ go-to gifts.

Credit analyst Charlie O’Shea, at Moody’s Investors Service, said, “Stores aren’t empty, far from it as people really want to go to the stores on Black Friday and on Thanksgiving. The question is how much are they spending, and how much [spending] is being augmented online. Best Buy had in-store only door busters–that’s a big traffic builder. The large guys will thrive.”

O’Shea’s “large guys” include Walmart, Target, Amazon, Costco and off-price retailers like TJ Maxx. While televisions are the big sellers at Best buy, Target’s private-label apparel selection should be a standout winner, he said.

“We saw Target return to ‘Tarjay’ with apparel and home goods,” O’shea noted. “They were prominently displayed before Halloween, and the discounter doesn’t have to promote [the categories] aggressively as its private label and they get a ton of margin, so they can tweak pricing as needed.”

Black Friday sales online are on track to hit $7.4 billion. although a new trend suggests Black Friday sales spreading out beyond one day.
An employee posts discount signs for shoppers at Macy’s department store during Black Friday shopping, in New York. Black Friday shoppers fought for parking spots and traveled cross-state to their favorite malls, kicking off a shortened shopping season that intensified the mad scramble between Thanksgiving and Christmas. Bebeto Matthews/AP/Shutterstock

How retailers retain customers over the holidays

Natalie Kotlyar, who heads up the retail practice at consulting advisory firm BDO, said she thought store traffic was slightly down this year as consumers shifted more of their purchases to online. She also believes that with early promotions, even as early as Amazon’s Prime Day in July, sales began much earlier in the shopping season.

Kotlyar believes there’s been confusion on the part of both the consumer and retailer. Shoppers aren’t sure they’re getting the best deal while merchants toe the line between offering conversion-worthy promotions and keeping their margins intact, she explained.

For now, the verdict on that front is still out. One thing that seems to have proliferated this year is what the Kotlyar calls “bounce-back coupons,” a marketing practice where retailers reward a purchase with coupon whose value depends on how much the customer spend, reedemable later on in the season. It’s a customer retention move, and one that Kotlyar said could work provided the original sale is based on an “honest discount.”

Trend alert: Black Friday sales spread out over a longer period of time

Joel Rampoldt, a managing director in the retail practice at AlixPartners, said, “Our guess is that the Black Friday business will spread out more than just today. It has been pulled forward into early November and October, with the very short holiday season this year.”

Retailers, he said, have been working hard to get sales “in the bag before today. When the dust settles, we’ll see an evolution where there’s less focus on a huge one-day sale on Black Friday, and more on a multi-day and multi-week [series of] continuation of sales.”

So far, what’s selling well are televisions and electronics, and merchandise tie-ins to big films, such as Disney’s Frozen 2 franchise. ‘The retailers that are doing well will continue to do well over holiday, while those that are struggling will continue to struggle,” Rampoldt said.