Cyber Monday is now every day
There are many things retailers would like to forget about 2020. The new rhythm of the holiday shopping season shouldn’t be one of them.
Cyber Monday accounted for $10.8 billion in online spending this year, according to Adobe Analytics, once again making the day the annual climax for online shopping during a busy stretch that begins on Thanksgiving. However, that figure, a 15% increase from last year, wasn’t as big as Adobe’s initial projection of $12.7 billion. It was a similar picture on Black Friday: Online spending soared 22% from a year ago to $9 billion, but sales were shy of an earlier estimate. Adobe forecasts online sales will surge 30% over the holidays, meaning these marquee deal days — though still crucial for retailers — won’t notch the same degree of growth as the season overall.
Meanwhile, the National Retail Federation reported Tuesday that an estimated 186.4 million people shopped online or in stores from Thanksgiving through Cyber Monday, down slightly from 189.6 million last year.
This is not a bad thing. It reflects a deliberate push by retailers to spread their deals out over a longer stretch of time. For example, analysts at Bank of America tracked the price of a basket of 35 popular holiday items for a one-week stretch that included Black Friday. There wasn’t much change in the cost of that basket at three top retailers, suggesting a shopper wasn’t missing out on much by filling her digital cart last Monday instead of Friday.
In fact, deals had been raining down on shoppers since well before last week as the industry sought to pull forward spending to relieve stress on e-commerce fulfillment networks and thin out store traffic to allow for social distancing. E-commerce sales figures suggest this strategy was effective: Adobe reports that Cyber Monday’s sales put the industry’s online haul at more than $100 billion so far this season, passing that milestone nine days earlier than last year.
Next year, even if the distribution of vaccines restores a more normal consumer environment, retailers should stick with a version of the holiday season in which Black Friday and Cyber Monday are less of a center of gravity.
It’s tough on sellers to have shopping centered on those days. If retailers continue with earlier deals next year, it could ease bottlenecks in online warehouses and logistics networks and potentially help them avoid peak season surcharges from shippers, which crimp profitability of online orders. When stores can host bustling crowds again, they’ll be able to provide better customer service if foot traffic isn’t so concentrated.
Spread-out deals are better for consumers, too. I know from many years of interviewing shoppers in line at doorbuster events at Best Buy Co. or in the aisles of Kmart on Thanksgiving in predawn hours that some of them truly are out for the sport of it. But for those who are more motivated by the promise of a bargain, they’ll appreciate the option to get deals without waiting in lines.
The pandemic also pushed most of the chief players in the retail industry to close their physical stores on Thanksgiving this year. That is another change to I’d recommend hanging onto next year. That day — in which people, in non-pandemic times, are visiting with family and traveling — is destined to become an especially online-centric spending occasion, and retailers might as well strategize accordingly.
Of course, there were aspects of the long holiday shopping weekend that retailers will not want to see repeated. Amid capacity restrictions and safety concerns, in-store traffic fell 48% on Black Friday from a year earlier, according to RetailNext. Physical store transactions tend to be the most profitable for old-school retailers, and getting people in stores is important for brand-building and impulse-buying, so the industry can ill afford to see mall traffic remain as depressed as it is.
In their attempt to make do in extraordinary circumstances, retailers found success by effectively presenting consumers with a string of mini-Cyber Mondays from October through November — and even now. Shoppers seem to have responded, and the industry would do well to make that a holiday tradition.
For more articles like this please visit bloomberg.com
© 2020 Bloomberg L.P. Originally published 1 December 2020. Opinions do not necessarily represent those of AXA IM.
Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 155 Bishopsgate, London, EC2M 3YD (until 31st December 2020); 22 Bishopsgate, London, EC2N 4BQ (from 1st January 2021).
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
© 2020 AXA Investment Managers. All rights reserved