Black Friday/Cyber Monday In Review

By Geoffrey Michael | December 09, 2010 AAA
Black Friday/Cyber Monday In Review

The U.S. recession may be over in a technical sense, but consumer spending has a long way to go before it returns to pre-2008 levels. The savings rate, long languishing at around 1% before the recession began, has risen to 6% as consumers' concerns about business failures, bailouts and their own jobs spurred them to start putting some money away. That's good news for personal financial security; it's not so good news to retailers that have endured two consecutive holiday seasons with disappointing financial results.

IN PICTURES: 8 Easy Ways To Slash Your Holiday Budget

The days of Black Friday signaling the start of the Christmas shopping season may soon be over. This year many stores opened on Thanksgiving Day and online sales transacted that day have risen steadily. The National Retail Federation (NRF) estimates that 22.3 million people shopped on Thanksgiving Day, double the number of five years ago. (To learn more, check out 5 Traps That Make It Hard To Save On Black Friday.)

Black Friday Weekend Results
Every year, it seems that retailers open their doors earlier than the prior year, and this year was no exception. Three times as many people started shopping at midnight Thursday as did last year, a rise from 3.3% to a record 9.5%. A quarter of the shoppers were at the stores by 4 am on Friday.

The NRF tracks retail sales for Thanksgiving Day, Friday, Saturday and projects an estimate for Sunday. Based on its survey results, total sales were $45 billion compared to last year's $41.2 billion, an increase of 9%. This was based on an estimated 212 million shoppers who crowded into retail stores and visited online merchants. That's also up 9% over last year's 195 million shoppers.

Shoppers Spending More
Shoppers also opened their wallets a little wider this year, as their average spending rose from $343 to $365. While last year's shopping tilted more toward practical gifts like clothing and appliances, the survey found that shoppers this year were more inclined to favor discretionary gifts such as jewelry. The number of people buying jewelry rose from 11.7% to 14.3%. The sales of toys, electronics and books were also up.

While shoppers were definitely looking for bargains, the traditional discounters actually saw their shopper totals drop from 43.2% to 40.3%. The data suggest that the biggest draw was not the absolute lowest price available, but the total value of the purchase. Traffic in clothing retailers (22.9% to 24.4%) and department stores (49.4% to 52.0%) rose from last year. Big winners on Black Friday were stores that featured big discounts that had a time limit. Gap was offering 50% off on everything purchased before 10 a.m. and that got shoppers into their stores.

Retail stores with a web presence and exclusive online merchants saw healthy gains in traffic volume. Signaling a stronger Cyber Monday ahead, online sales jumped 15.2% from last year.

IN PICTURES: 5 Money-Saving Shopping Tips

Cyber Monday Results
What started as a gimmick five years ago to get people to shop on the first work day after the long Thanksgiving weekend, Cyber Monday is now serious business and critically important to online retailers. The day dubbed by the NRF is now promoted by many stores as heavily as Black Friday, using both email blasts and online advertising. They have good reason since a record 33.6% of shoppers bought online during the year.

Some analysts feared that a stronger Black Friday might result in a weaker Cyber Monday, theorizing that the spending pie is only so large and that bigger slices on Friday, Saturday and Sunday would leave a smaller slice for Monday. In fact, Shop.org (the online arm of the NRF) predicted a drop in the number of online shoppers from 12.1% last year to 11% this year.

However, by 6 p.m., that figure had risen to almost 20% and cemented Monday as the top online sales day of the year. When the final numbers are in, the total is expected to reach $1 billion in sales, surpassing last year's total of $887 million.

Increases in Cyber Monday Promotion
Cyber Monday was promoted heavily this year as a way to avoid standing in long lines in the middle of the night waiting for stores to open. Online promotions were offered by about 90% of retailers this year, up from 72% three years ago. Retailers are also using social networks such as Twitter and Facebook to promote their brands and the latest deals. Wal-Mart (NYSE:WMT) is taking the event a step further and promoting what it calls "Cyber Week." (For more, see Make Money With Social Networking Sites.)

The Holiday Outlook
While shoppers seem to be spending more so far, the challenge for retailers is keep the momentum going until Christmas and hope that shoppers haven't already emptied their wallets. Black Friday isn't always the best leading indicator, but retailers are hoping the positive trend continues.

Shoppers have come to expect huge discounts, and meeting that expectation will likely reduce profit rates in exchange for higher sales. Retailers are clearly hoping to improve their bottom lines by taking sales volume away from their competitors, and the best way to do that right now seems to be by cutting prices. The bottom line is that deals are driving sales rather than significantly improved confidence in the economy. (For more, check out Holiday Budget 2010: How Do You Stack Up?)

Find out what happened in financial news this week. Read Water Cooler Finance: Steady Stocks, Big G's And Madoff News.

comments powered by Disqus
Related Articles
  1. As Boomers Slow Down, Will The Economy ...
    Investing News

    As Boomers Slow Down, Will The Economy ...

  2. Choosing The Winners In The Click-And-Mortar ...
    Investing

    Choosing The Winners In The Click-And-Mortar ...

  3. Why Facebook Should Buy Twitter
    Stock Analysis

    Why Facebook Should Buy Twitter

  4. Websites That Save You Money On Hotel ...
    Personal Finance

    Websites That Save You Money On Hotel ...

  5. Four Ways To Spot An Emerging Market
    Investing Basics

    Four Ways To Spot An Emerging Market

Trading Center