Soaring US ecommerce sales on the day after Thanksgiving have put Black Friday on course to challenge Cyber Monday as the year’s busiest online shopping day. But the opening days of the holiday shopping season have also seen heavy discounting that could weigh on retailers’ profits.
US ecommerce sales hit a record $3.34bn on Black Friday, a 22 per cent increase from 2015, according to Adobe Digital Index. But that figure almost matches the data company’s $3.36bn estimate for Cyber Monday sales, which would translate as 9.4 per cent growth over last year.
Growing competition at both online and physical stories is pushing retailers to offer steep discounts. The National Federation of Retailers said average spending over the long weekend that marks the start of the industry’s most important season dropped to $289.19, down slightly from $299.60 last year due to aggressive promotions.
DynamicAction, a retail data analytics group whose investors include Accenture, said that special online offers — such as those requiring a promotional code or applied at checkout — rose 42 per cent year-on-year on Black Friday, while markdowns increased 23 per cent.
Walmart, which is the world’s largest retailer by sales and accounts for about 9 per cent of US retail sales, made clear that it would be discounting aggressively this holiday season as it takes on Amazon online and battles to win market share from traditional rivals. But investors will be watching retailers’ fourth-quarter earnings carefully to see whether this price war is eating into margins.
“I said it before and I will say it again, we will win the season on price — on Black Friday, on Cyber Monday and every day before and after,” said Steve Bratspies, chief merchandising officer of Walmart US, said earlier this month.
Retailers typically hope that consumers lured in to stores, websites or apps by bargains will also spend on full-priced items. The NRF said, however, that more than 30 per cent of those it surveyed this year had said that everything they had bought over the weekend had been discounted.
Charlie O’Shea, Moody’s retail analyst, said the depth of discounts retailers offer next week would offer clues to how well they had done over the long shopping weekend.
“If a retailer has discounts of 50 per cent off this weekend, you take stock on Monday and Tuesday. If they’re then offering 60 per cent off, they didn’t have a good weekend. If they’re offering 30 per cent off they had a really good weekend,” he said.
The shift to online shopping dented foot traffic to physical stores on Thanksgiving and Black Friday, which fell 1 per cent this year compared with 2015, according to ShopperTrak.
Black Friday was also a record for mobile shopping, which reached $1.2bn, a 33 per cent increase and surpassing the $1bn mark for the first time, Adobe said, contributing to the overall online record.
“Black Friday may have just dethroned Cyber Monday’s position as the largest online shopping day of the year,” said Tamara Gaffney, a director at Adobe.
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