Black Friday Stats Show Fewer In-Store Shoppers
Thanksgiving weekend retail sales reports offer significant insights into the economy and the way customers choose to spend their holiday budgets.
According to the National Retail Federation, more customers chose to shop online than in stores this Black Friday, Nov. 27, although total sales numbers were weaker than 2014.
While Black Friday has traditionally been the busiest shopping day of the year, the growth of omnichannel retailing has changed the way people shop on the day after Thanksgiving.
Sure, many people still line up as early as 6 p.m. on Thanksgiving to take advantage of “door buster” deals, but just as many would prefer to digest their turkey in peace while scanning the deals on a retailer’s website.
According to a recent Bloomberg article, the NRF’s numbers show that this is exactly what happened on Black Friday 2015.
An annual survey commissioned by the NRF shows that more than 103 million people shopped online over the four-day weekend, which started Thursday on Thanksgiving and continued with Black Friday. That compares with fewer than 102 million who ventured into traditional stores, according to the Bloomberg piece.
Even though millions chose to shop online, overall sales numbers are down.
ShopperTrak estimates that brick-and-mortar retail sales on Thanksgiving Day and Black Friday reached $12.1 billion on a combined basis, which is down from the $12.3 billion it projected over the same two days in 2014, according to a recent RetailWire post from the site’s managing editor, Tom Ryan.
“Specifically, Thanksgiving Day grossed an estimated $1.8 billion in sales, while Black Friday garnered an estimated $10.4 billion in sales,” Ryan wrote.
Ryan does note in his article, however, that the reason for the weaker sales may be the result of retailers offering early deals, resulting in holiday spending that is more spread out over the months leading to Christmas.
Omnichannel Logistics Costing Retailers Trillions
Retail isn’t just divided into online and offline sales anymore. Omnichannel shopping means that just about every step of a retail transaction (selection, payment and physically receiving a product) has become a variable.
One consumer may shop for a product online, but visit a store to pick it up.
Another may shop for a product in a store, but order it directly from a mobile phone and have it delivered to a secure locker near his or her home.
Wal-Mart Stores Inc. even allows consumers to order products online, pay for the product at a Walmart store, and then have the product delivered to the location of their choosing.
These are big changes in how retailers do business, and the industry is experiencing growing pains. Costly growing pains. In a recent article, CNBC notes that problems with logistics are costing retailers $1.75 trillion per year.
A study commissioned by retail logistics firm DynamicAction and conducted by IHL Group shows “out-of-stocks” accounted for $634.1 billion in lost retail sales for the fiscal year that ended in the spring. That loss is 39 percent higher than in 2012, according to CNBC.
On the other hand, overstocks contributed $471.9 billion in lost revenues, up 30 percent from three years prior, according to the story.
When a retailer has too much merchandise, it cuts into its margins.
Another area that’s been a significant source of concern for retailers is tied to complaints with “click and collect,” or “in-store pickup.” Despite the fact that over 30 percent of consumers in the U.S. use these services to make online purchases and then pick them up at a local store, the majority report problems with the process.
A poll of about 5,000 shoppers, conducted by consulting firm Cognizant, shows that more than 60 percent who used in-store pickup reported dissatisfaction, citing issues such as long wait times at the counter, items not ready for pick-up, and confusion among customer service associates, according to a post on InternetRetailer.com.
Patti LaBelle’s Sweet Potato Pie Proves the Value of Social Media
Never mind tablets and TVs, one of the hottest and scarcest products this Thanksgiving season was a sweet potato pie that sells for $3.48 at Wal-Mart Stores Inc. The reason for the huge sales? A fan, James Wright, reviewed the pie on YouTube and offered up some song and dance as an accompaniment. The video went viral, and pie sales escalated.
Unfortunately for the world’s largest retailer, demand quickly outpaced supply. Pies sold out in stores all over the country, occasionally landing on eBay for as much as $50.
Despite its incredible buying power, sourcing the necessary ingredients to replenish the stock proved a challenge.
“There’s a lot of moving parts. The suppliers have been working all weekend,” Kerry Robinson, vice president for bakery and deli at Walmart, told the Associated Press on Nov. 23. “We need something like 2 million pounds of sweet potatoes, and that’s not something easy to get.”
If there is anything that proves the power of consumer-created social media content, James Wright’s video is it.
However, while retailers are likely taking note of Walmart’s surprise pie run, analysts are cautioning them not to attempt to duplicate independent social media content in-house.
A study conducted by Contently found that most consumers have overtly negative opinions upon discovering a piece of content they’ve just viewed is sponsored content, as well as the genre in general, according to a piece on PYMNTS.com, a user-generated and expert-driven commentary site. A majority (54 percent) of respondents said they didn’t trust sponsored content, and 59 percent admitted that a news site loses a certain degree of credibility in their eyes when they realize it runs sponsored content alongside regular coverage.
In other words, consumers connect with social media content developed by ordinary people who offer their own, honest reaction to a product.
Retailer- or manufacturer-sponsored content doesn’t have the same impact, and could actually damage the brand’s appeal. Instead, analysts recommend that brands develop positive relationships with consumers in hopes of inspiring genuine social media content that drives sales.