The Supply Side: Holiday sales exceed expectations, fueled by online growth

The early forecasts for holiday sales were somewhat lackluster, but with the first half of the shopping season in the books, the results are better than expected, according to Matthew Shay, CEO of the National Retail Federation (NRF).

Shay said 197 million shoppers hit the stores and shopped online during the five-day Thanksgiving period from November 28 through Dec. 2. The forecast had been 183.4 million shoppers, or more than 75% of the U.S. adult population.

“More people were shopping in stores and online because they gear up for the holidays even with lingering inflation. We expect a very healthy holiday season,” Shay said.

While most brick-and-mortar stores were closed Thanksgiving Day, Adobe Analytics reports consumers spent a record $6.1 billion online on Thanksgiving, up 8.8% year-over-year.

Throughout the long weekend, consumer spending online set records while brick-and-mortar store traffic was lighter than in recent years, according to Sensormatic Solutions, which tracks in-store traffic. Sensormatic reports store traffic on Black Friday was down 8.2% from a year ago.

Shoppers were willing to line up for stores that promoted deep discounts with apparel being a big winner and there were regional differences. Consulting firm Kearney reports retailers like Forever 21 and H&M lured customers into stores with discounts of 50% to 70%. Walmart and Best Buy also reported strong in-store traffic for Black Friday. Mall merchants from Macy’s to JCPenney saw weaker traffic during the 5-day shopping period, Kearney noted.

NRF reports 81.7 million consumers shopped in physical stores on Black Friday, and 87.3 million shopped online. Shay said retailer discounts averaged 30% for the holiday weekend, no more than what was offered a year ago. RetailNext pegs in-store traffic on Black Friday down 3.2% overall, with counts falling the most in the Midwest — down 7% likely due to winter storms.

ONLINE GAINS
While Shay was pleased with the stronger-than-expected in-store turnout this holiday season, he said consumers are also shopping more online, and retailers that can offer both will be the biggest winners.

“Retailers will count on that momentum continuing for the rest of the holiday season, albeit a compressed season this year, with in-store sales picking up on Black Friday. Cyber Week was strong, where bigger-than-expected discounts on Thanksgiving propelled impulse shopping in categories like electronics and apparel,” said Vivek Pandya, lead analyst with Adobe Digital Insights. “As people gathered with family and friends, many were hitting the buy button on their mobile devices, which hit an all-time high for the overall holiday season.”

Black Friday online sales reached a new milestone. Adobe reports consumers spent a record $10.8 billion online during Black Friday (Nov. 29), up 10.2% year-over-year.

Categories that Adobe said performed well online during Black Friday included toys, jewelry, appliances, personal care, apparel and electronics. Adobe also said 55% of online sales came through a mobile device, representing $5.9 billion in spending, up 12.1% from a year ago. The buy now, pay later (BNPL) purchases totaled $686.3 million, up 8.8% year-over-year. Based on Adobe data, consumers tend to use BNPL for categories such as electronics, clothing, video games and groceries.

Numerator also reports that Black Friday was a strong shopping day. Among consumers who shopped over Cyber Weekend, 74% said they shopped on Black Friday, followed by Cyber Monday (61%), the Saturday after Thanksgiving (47%), the Sunday after Thanksgiving (31%), and Thanksgiving Thursday (25%), Numerator reports. Also, 52% of shoppers said they shopped mostly or exclusively online during Cyber Weekend, nearly three times as many who shopped exclusively or mostly in-store (18%).

Numerator said Amazon, Walmart and Target were three favorites during the holiday weekend shopping period. Numerator reports 86% shopped Amazon, 65% shopped Walmart, 46% shopped Target, 31% shopped department stores, 22% shopped wholesale clubs, 19% shopped home improvement stores, 19% shopped beauty stores, and 16% shopped discount stores. Best Buy garnered 14% of the shoppers and Temu 13% over the five-day shopping period.

Numerator reports that 93% made purchases at two or more retailers or websites over the weekend. One-third of consumers shopped at three different locations, 15% shopped at four retailers, and 27% shopped at five or more retailers. The top category for sales over the weekend was apparel and shoes as 64% reported making these purchases. Beauty products or cosmetics were purchased by 34% of the shoppers, while 31% said they purchased toys. Other categories shopped by consumers include home goods (28%), consumer electronics (26%), gift cards (26%), books and other media (21%), pet products (20%) and household essentials (17%).

Adobe reports Cyber Monday exceeded expectations as U.S. consumers spent $13.3 billion online during the day, up 7.3% year-over-year and surpassing Adobe’s estimate of $13.2 billion. Cyber Monday marked the conclusion of what Adobe tracked as a successful Cyber Week — five-day period from Thanksgiving to Cyber Monday — which brought in $41.1 billion online, up 8.2% year-over-year.

The five-day period encompassed record spending online during Thanksgiving at $6.1 billion, up 8.8% year-over-year. Black Friday spending was $10.8 billion, up 10.2% year-over-year, and over the weekend of Nov. 30 and Dec. 1, spending was $10.9 billion, up 5.8% year-over-year. Adobe expects online spending for the Nov. 1 to Dec. 31 period to hit $240.8 billion, up 8.4% year-over-year.

Adobe also reports the increased online spending comes as many prices have fallen over the past 24 months for items like apparel and other general merchandise.

INSIDER REACTION
Sucharita Kodali, an equity analyst at Forrester, said mall merchants remain challenged as more consumers turn online to Amazon, Temu and niche brands. She said Macy’s preliminary net sales decline of 2.4% in the recent quarter indicates the flight to discounters. TJX and the other off-price retailers continue to grow their share with positive sales, and she does not see this changing in 2025.

Kodali said Walmart is positioning itself better online with its growing marketplace, but Temu remains a threat as it brings warehouses to the U.S. to allow for faster shipments. Kodali said niche direct-to-consumer brands are also taking share in social commerce and live stream shopping opportunities. She said Walmart is also playing in the social commerce space unlike many of its competitors.

She also counts the Gap brand stores and H&M in the lackluster category, while Abercrombie & Fitch seems to have found its way forward. The once-teen fashion retailer is now appealing to professionals between the ages of 20 to 49 as it offers lifestyle fashions that have sent comparable store sales up double-digits over the past six consecutive quarters.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by Firebend.