Report: Winter Retail Off to Strong Start Despite Sluggish Black Friday

The 2020 winter retail season is projected to be positive despite some concerns that the traditional Black Friday retail jump-starter underperformed. New credit card data from Bank of America Merrill Lynch for a seven-day period through Nov. 21 (before Black Friday), saw a 9.1% uptick in purchases compared to the same period in 2019. Online sales through the winter holiday season are projected to increase by 31% from last year.

Bank of America contends retailers, especially big-box stores such as Walmart, Target and Best Buy, have spread out Black Friday deals and consumer incentives throughout the holiday period.

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Adobe Analytics predicts that U.S. online holiday sales will total $189 billion, shattering all previous records with a 33% increase from 2019 — equal to two years’ growth in one season. If consumers receive another round of stimulus checks and physical stores need to shut down again in large parts of the country, consumers are expected to spend an additional $11 billion online, surpassing a total of $200 billion (47% increase from 2019).

Instead of Cyber Week (Thanksgiving Day to Cyber Monday), Adobe expects November and December to turn into Cyber Months this year:

  • Online sales will surpass $2 billion every day between Nov. 1-21 and increase to $3 billion a day Nov. 22–Dec 3.
  • Black Friday is projected to generate $10 billion in online sales, a 39% increase from 2019; Cyber Monday will remain the biggest online shopping day of the year with $12.7 billion, a 35% jump YoY.
  • Americans will spend $28.1 billion more on their smartphones vs. 2019, accounting for 42% of all online sales, a 55% increase from 2019.
  • Small retailers ($10 million-$50 million annual online revenue) will see a larger boost to revenue (107% boost) vs. large retailers (84% boost).
  • Most anticipated gifts/toys: PlayStation 5, Xbox Series X, Nintendo Switch. Adobe expects 9% of all holiday customers to be net new online shoppers due to the pandemic, and conversion rates are expected to increase significantly (13%).

 

“Despite the lower-than-expected growth on Black Friday, we expect total holiday season sales could still exceed the consensus 31% growth as Black Friday is expected to generate only about 5% of total holiday season expected sales ($10 billion of $190 billion per Adobe Analytics), and retailers are offering prolonged sales, lasting the entire holiday season,” Bank of America wrote in a note. “The more spread out sales should also help alleviate fulfillment bottlenecks, spreading out capacity utilization over a longer period of time.”

NRF: 2020 Winter Holiday Sales to Grow 5%

The National Retail Federation Nov. 23 forecast that holiday sales during November and December will increase from 3.6% to 5.2% over the same period last year, generating $755.3 billion to $766.7 billion in revenue. The data, which excludes automobile dealers, gasoline stations and restaurants, compares with a 4% increase to $729.1 billion in 2019, and an average holiday sales increase of 3.5% over the past five years.

“We know this holiday season will be unlike any other, and retailers have planned ahead by investing billions of dollars to ensure the health and safety of their employees and customers,” Matthew Shay, CEO of the retail trade group, said in a statement. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year.”

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NRF expects that online and other non-store sales, which are included in the total, will increase between 20% and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.

“Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend,” said NRF Chief Economist Jack Kleinhenz.

Kleinhenz said households have strong balance sheets supported by a strong stock market, rising home values and record savings boosted by government stimulus payments issued earlier this year. Jobs and wages are growing, energy costs are low and reduced spending on personal services, travel and entertainment because of the virus has freed up money for retail spending.

As a result of store shutdowns and stay-at-home orders last spring, not all retailers and categories have rebounded as quickly, including small and mid-sized retailers. However, in the aggregate retail sales have been growing month-over-month and year-over-year since June. As calculated by NRF, sales were up 10.6% in October versus October 2019, likely driven in part by early holiday shopping. For the first 10 months of this year, retail sales were up 6.4% versus the first 10 months of 2019.

With e-commerce sales up 36.7% year-over-year during the third quarter, many households are expected to depend on digital shopping to make many of their holiday purchases, just as they have for much of their everyday spending this year. The online spending includes websites operated by bricks-and-mortar retailers, which have become major players in the online market as retail channels have merged.

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The NRF forecast is based on an economic model that takes into consideration a variety of indicators, including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather. NRF defines the holiday season as Nov. 1 through Dec. 31.

The forecast comes as NRF’s latest research shows 42% of consumers started their holiday shopping earlier than usual this year. NRF’s “New Holiday Traditions” campaign has urged consumers to shop safe and shop early amidst the pandemic, and 59% had begun by early November, up from 49% at that point a decade ago.

 

Verizon: Online Holiday Shopping Traffic Up 82%

With the annual post-Thanksgiving Black Friday retail event a week away, new research data suggests consumers have already begun their winter holiday shopping — online, with e-commerce traffic up 82% in November compared with the previous-year period.

The seventh annual edition of the Verizon Business Retail Trends Report finds holiday shopping surging early this year and confirms how COVID-19 restrictions and related health concerns could be linked to an increase in online shopping this holiday season.

Verizon says mobility traffic to and around the U.S.’s largest malls — as evidenced by their cell phones — has decreased dramatically from last year. According to the telecom, people are moving to and around malls 20% less than they did last year during early November. There’s also a 28% increase in use on payment sites versus last year.

“Our report confirms what we expected to be true, significant shifts continue from in-person, brick and mortar shopping to online shopping,” Michele Dupre, VP of sales vertical markets, retail and hospitality for Verizon Business, said in a statement. “What’s surprising and promising for retail stores is while mobility around U.S. malls is down from last year, it’s up significantly at 59% since the height of the pandemic. Online retailers will need to continue to invest in creative and innovative customer experiences, to capture revenue and offset lost sales from in-person shopping.”

Report: Consumer Confidence Up Entering Winter Holiday Retail Season

Despite the impact that COVID-19 has had on consumers’ lifestyles over the past several months, U.S. consumers are still looking forward to the holiday season — with 64% reporting that they are just as or more excited about the holidays this year compared with last year.

The data comes from a survey of more than 800 U.S. consumers in September by video advertising platforms Unruly and Tremor Video. The study takes a closer look at consumer interest and demand for the first holiday season since the pandemic began. The research reveals how consumers are prioritizing and planning their holiday shopping experiences as the colder months approach.

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Balancing out optimism with the reality of COVID-19, 42% of respondents think holiday ads should reference COVID-19, while 57% want ads to make them feel happy. While planning holiday advertising campaigns, respondents said brands should take special care to celebrate the season while balancing the acknowledgement of the hardships that consumers have faced this year.

The survey found that 75% of respondents plan to do at least half of their holiday shopping online and 53% will increase the frequency of their online shopping. About 53% will be watching TV more frequently and 58% will be browsing the internet more frequently.

Another 41% believe that TV ads are among the most influential media channels in terms of inspiring their holiday purchase decisions, while 50% plan to do the bulk of their holiday shopping in November.

“Online shopping and TV consumption are on the rise this holiday season, and as these channels are increasingly embraced due to continued stay-at-home restrictions,” Terence Scroope, VP of Insights at Unruly and Tremor Video, said in a statement.

Although shopping attitudes and behaviors have shifted considerably since the start of the COVID-19 pandemic, the survey contends brands can find success by learning to reach consumers at their comfort levels and employing nuanced media plans for the holidays.

Indeed, 89% of consumers from households that make more than $100,000 per year plan to do at least half of their holiday shopping online, followed by 79% of those from households that make $40,000 to $100,000 per year and 67% of those from households that make less than $40,000 per year.

Nearly 56% do not plan to travel this holiday season (increasing to 77% for consumers aged 55 or above); however, more than 25% intend to travel within their state of residence and nearly 15% are planning out-of-state travel. Around 50% of consumers under 55 believe that COVID-19 should be referenced in ads.

“Brands should seize this opportunity to deliver highly targeted, personalized ads to consumers across all screens, including CTV, in-app, instream, mobile and desktop,” Scroope said.

NRF: Half of Winter Holiday Shopping Already Started

Friday, Nov. 29 is often considered the beginning of the winter retail season with ubiquitous Black Friday specials prominent everywhere.

But new data from the National Retail Federation suggests almost half of all winter shopping has already begun — much of it driven by e-commerce.

The NRF commissioned survey found 56% of respondents had already begun their holiday shopping during the first week of November. That was up from 48% who had already started at the same point a decade ago. On average, consumers had completed 24% of their shopping, the highest level in the history of the survey and up from 16% in 2009.

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“This is further evidence that the holiday season has grown far beyond the period between Thanksgiving and Christmas,” Matthew Shay, CEO of NRF, said in a statement. “Thanksgiving is still a hallmark of the season, and there’s billions of dollars in shopping still to come. But many consumers have already been shopping for weeks, and retailers are increasingly adapting to that.”

NRF defines the holiday season as Nov. 1 through Dec. 31 and has forecast that sales will total between $727.9 and $730.7 billion. Consumers expect to spend an average $1,047.83 — including purchases made earlier — for an increase of 4% over last year.

There are only 26 days between Thanksgiving and Christmas this year, down six days from last year, but NRF does not expect that to make a difference in spending given the number of people who begin shopping earlier.

“Consumers don’t wait for Thanksgiving or Black Friday anymore and neither do retailers,” said Phil Rist, EVP of strategy at Prosper Insights & Analytics, which conducted the survey for NRF. “Retailers responded this year by offering promotions earlier than ever, with some rolling out holiday deals even before Halloween.”

Adobe: Strong November Holiday Sales Portend Robust Winter Retail Season

With the winter retail season about to start, new data from Adobe Analytics suggests some big-box stores will score big through Christmas — based on analysis of more than a trillion visits to over 4,500 retail sites.

Adobe said winter retails sales from Nov. 1 to Nov. 26 increased 15% to $143.7 million compared to the previous-year period.

The software company projects November-December retail sales will increase 3.8% to 5% — up from 2.1% last year. Cyber Monday (e-commerce) is projected to generate $9.4 billion in revenue.

“With the shorter shopping season and retailers starting their promotions earlier, Adobe is seeing holiday discounts already well underway even before Thanksgiving day,” Jason Woosley, VP of commerce, said in a statement.

Top retailers over the holiday season include Target, Walmart, Best Buy and Amazon due in large part to their e-commerce platforms.