Cyber Monday and Black Friday just aren’t what they used to be.
The traditional kick-off weekend to the holiday shopping season got off to a slow start on Black Friday, and if retailers were hoping that Cyber Monday would take up the slack, experts say don’t hold your breath.
That’s because the way Americans shop for the holidays (and the way retailers entice them to shop) has changed. Some shoppers got an early jump on bargain-hunting with Black Friday-type discounting starting earlier than ever (including at the crack of dawn on Thanksgiving Day). Others, knowing that the bargains get better the closer it gets to Christmas, will hold out until the last minute.
According to the National Retail Federation trade group, shopper traffic fell by more than 5 percent over the weekend compared with 2013, the average amount they spent fell by more than 6 percent, and total spending dropped by $6.5 billion. Some 4.7 billion fewer people were expected to conduct Cyber Monday shopping.
The NRF argued that the drop shows that people are feeling better about the economy because consumers aren’t chasing deals to the same extent as they have in years past. Lower numbers also could suggest that people are responding to early promotions that started, in some cases, up to a week before Black Friday.
“Store sales have probably been squeezed by heavy promotional activity in the days leading up to Friday,” Forrester Research analyst Sucharita Mulpuru said via email.
“I don’t know how they can discount any more than they’re currently discounting.”
This reflects a sea change in how American shops for the holidays, forcing retailers to adapt on the fly.
“I don’t know how they can discount any more than they’re currently discounting,” said Patrick McKeever, senior equity analyst at MKM Partners LLC. “It’s almost unreal how widespread the promotions are.”
Late season deals?
While early discounting goosed sales on Thanksgiving and beforehand, the prospect of late-season deals, especially ones that include free shipping, could prompt shoppers to wait until the last minute.
”Moving forward, the Black Friday event itself will be come eclipsed by the fact that we have a shopping season that stretches out almost until the holiday,” predicted David Jones, web and mobile performance strategist at Dynatrace.
Shipping companies are gearing up to meet a late surge in demand, after glitches last year marred people’s holidays when gifts failed to arrive in time for Christmas.
FedEx predicts it will move 9 percent more shipments over last year. The company anticipates a peak day of December 15. Rival UPS predicts shoppers will wait a little longer. It is targeting Dec. 22 as a peak day and expects an 11 percent jump for December.
Amazon is also anticipating a surge and installed some 15,000 robots at 10 warehouses around the U.S. to help expedite fulfillment, according to Reuters.
“The bottom line is it’s been a tough year.”
Although retailers anticipate a certain amount of discounting, playing chicken with the American consumer tends to not end well for them, especially when wages for many people have remained flat. Stores could find themselves waiting for a bump that never comes and end up cutting into margins to move merchandise.
“If retailers were in fact down significantly for the week, we will see very aggressive promotions this week and next,” Mulpuru said. “And it will absolutely hurt their margins.”
Although lower gas prices are giving consumers a bit more breathing room, McKeever said this is unlikely to translate to a retail boon in the fourth quarter. “It’s going to be a tough quarter, from a margin standpoint, for retail,” he said. “The bottom line is it’s been a tough year.”