US retailers’ combined sales over Thanksgiving weekend fell this year according to initial estimates, despite stores aggressively extending opening hours in an effort to fire up spending at the start of the holiday season.
The National Retail Federation, the largest US industry retail group, estimated on Sunday that spending over the four-day weekend would fall 11 per cent to $50.9bn, from $57.4bn in 2013. The average shopper is expected to spend $380.95 over the weekend, down 6.4 per cent from last year.
ShopperTrak, a research group, reported meanwhile that sales at bricks and mortar stores fell 0.5 per cent to $12.29bn on Thursday and Friday. This compared with $12.35bn spent on the same two days in 2013 and suggests the continuation of a downward trend that has become marked in recent years.
US consumer sentiment is at its highest level in seven years, boosted by lower petrol prices and improving job prospects. But a competitive retail climate prompted many stores to open earlier on Thanksgiving and launch holiday deals in mid-November rather than limiting them to one day, fighting to catch customers early before they ran short of money during the busiest shopping period of the year.
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Estimated fall in spending over the Thanksgiving weekend – National Retail Federation
This appeared to trigger an earlier shift in spending patterns this year, with customers carving into time traditionally spent eating turkey with their families. Preliminary ShopperTrak data showed that foot traffic rose 27.3 per cent on Thanksgiving Day compared with a year earlier, but fell 5.6 per cent on Black Friday.
Analysts now expect spending to be spread more broadly across November and December, weakening the sales spike traditionally seen around the Black Friday weekend.
“The macroeconomic environment may be more favourable for some consumers but for retailers it continued to be a heavily promotional and challenging environment,” said Matthew Shay, chief executive of the NRF. “Shoppers are very savvy, deals-focused and from here on in its going to be a dogfight. Every day until Christmas will be Black Friday, every minute a Cyber Monday,” he added.
Bill Martin, founder of ShopperTrak, suggested the slip in sales volumes meant consumers may be browsing more and delaying shopping until later in the season. He stressed that seven of the year’s 10 biggest shopping days were yet to take place, including Super Saturday, the final Saturday before Christmas, which has now eclipsed Black Friday to become the biggest shopping day on the calendar.
“Consumers clearly gravitated towards Thanksgiving at the expense of Black Friday this year, but these two days are not indicative of what might happen across the entire season. There is a significant amount of energy left in the consumer,” he said, adding that although last year Black Friday weekend sales rose by just 1 per cent from 2012, sales for the entire season ultimately logged a gain of 3.1 per cent.
“It’s important to remember that, despite getting out of the gates quickly, the holiday season this year is a marathon and not a sprint,” said Mr Shay. Last month the NRF forecast that November and December’s combined online and offline sales would increase 4.1 per cent to $617bn this year – the highest for three years.
Despite the weaker figures from retailers’ bricks and mortar stores, ecommerce sales continued to boom this weekend as more consumers opted to avoid the crowds and shop online.
Increase in online sales on Thanksgiving Day – IBM
According to early figures from IBM, which tracks 800 US retail sites, online sales on Thanksgiving Day increased 14.3 per cent, while sales on Black Friday were up 9.5 per cent. Sales from mobile devices jumped over 25 per cent on both days, the company said.
Walmart, the world’s largest retailer by sales, said Thanksgiving Day broke records to become its second-highest online sales day ever behind Cyber Monday last year. Mobile drove more than 70 per cent of traffic on Walmart.com, suggesting that smartphones are becoming more integral to the way consumers shop.
The website of retail group Best Buy went down following a surge in traffic from mobile devices on Black Friday morning. Meanwhile, online-only rivals to bricks and mortar-focused chains continued to gain ground. eBay’s Black Friday sales rose 27 per cent over last year, and Amazon saw a 24 per cent increase.
“From here on in its going to be a dogfight”
– Matthew Shay, National Retail Federation CEO
UK retailers, which have gradually imported the Black Friday phenomenon over the past four years, saw chaotic scenes as shoppers fought over discounted goods.
Visa Europe reported that online spending on Visa cards increased more than 30 per cent over last year’s Black Friday to £600m, with high street spending up about 20 per cent to £1bn.
Kevin Jenkins, Visa’s managing director for the UK and Ireland, said: “Friday was the UK’s biggest ever shopping day and beat all predictions.” He added: “Heading into Cyber Monday we’re likely to see a further £500m spent online, peaking in the early evening as workers return home and log on.”
Date: November 30, 2014