icon-cookie
The website uses cookies to optimize your user experience. Using this website grants us the permission to collect certain information essential to the provision of our services to you, but you may change the cookie settings within your browser any time you wish. Learn more
I agree
blank_error__heading
blank_error__body
Text direction?

Black Friday, Cyber Monday Sales Hit Another High, But It's Not Time To Celebrate Yet

Andria Cheng
Andria Cheng Senior Contributor
Opinions expressed by Forbes Contributors are their own.
Retail I cover retail, from fashion to grocery, and its dance with technology

Black Friday and Cyber Monday are expected to ring in record sales. (Photographer: Jeenah Moon/Bloomberg)© 2018 Bloomberg Finance LP

The American sport of deal hunting and conspicuous consumption has again been on display with the onset of Black Friday doorbuster deals followed by Cyber Monday promotions enticing consumers to open their wallets and officially kick off the U.S. holiday shopping season.

On Cyber Monday, an occasion the industry invented to encourage online shopping, American consumers spent $7.9 billion,making it the biggest online shopping day in U.S. history, according to Adobe Analytics. That follows record online sales for both Black Friday and this past weekend.

More than $2 billion of Monday's sales, or nearly 20% of the day's total, came from smartphones, after mobile spending topped $2 billion for the first time on Friday, according to Adobe.

However, there's more to take away than those rosy online headlines.

Brick-and-mortar’s traffic is still in the negative column. As Amazon and other retailers drive increased online sales and traffic, visits to physical stores, where the bulk of the industry’s sales is made, continued to slow. RetailNext, which measures store traffic and other data at more than 425 retail brands, said brick-and-mortar sales on Thanksgiving and Black Friday had dropped by as much as 7% while traffic was down 5% to 9%—at least the fourth straight year when both of those measures declined.

ShopperTrak data also showed store visits declined 1% for the two-day period, including a 1.7% drop on Black Friday, which the mall-traffic tracker said is “consistent with data results over the last several years.”

There were some encouraging signs, however. Despite the declining visits, more of those who visited stores opened their wallets, spending more per transaction, according to RetailNext. In total, about 151 million people visited a mall or a shopping center over the weekend, according to a survey by trade group International Council of Shopping Centers. Over the four-day Thanksgiving weekend, consumers visited an average of 11 stores, ICSC survey found.

“Black Friday just isn't what it used to be.” Yes, Black Friday, the day after Thanksgiving that signals the traditional start to the holiday shopping season, is still significant: ShopperTrak still projects it will be the busiest shopping day.

But gone are those long lines outside stores like Walmart and Best Buy in the wee hours of Friday. With major retailers having moved up store-opening hours to Thanksgiving and extended doorbuster deals to the web, Friday has continued to lose some of its shine.

In a survey of 60 properties it manages, commercial real estate firm JLL said none of its West Coast properties opened on Friday before 5 a.m., with 86% saying they opened shops after 8 a.m. On the East Coast, only 9% of the shopping centers said they opened before 5 a.m. on Friday.

“Anecdotal feedback from the field was that Black Friday just isn't what it used to be,” Gordon Haskett analyst Chuck Grom said in a report, adding that his team observed “high” doorbuster product availability on Friday, which suggests store traffic may not have been as good. “Our own field work has admittedly become less reliable given the confluence of both online shopping and the extension of selling days.”

The line between physical and online sales is more blurred than ever. Retailers are in a race to capitalize on the benefit of both the online and brick-and-mortar worlds: While Amazon and other so-called digital native brands are expanding their physical footprints—with Amazon partnering with retailers like Kohl’s to process returns—physical retailers from Walmart to Macy’s are doubling down on their e-commerce spending and using their store fleet for such services as online ordering for store or curbside pickup.

The stakes are high against the backdrop of increased last-mile delivery costs and consumers’ increased demand for fast deliveries and instant gratification, not to mention the brick-and-mortar sector’s need to lure traffic. Not only did Black Friday, a day once synonymous with in-store shopping, see the day’s biggest online sales ever of $6.2 billion, but online orders from consumers choosing to pick up in stores surged 73%from Thursday to Friday, according to Adobe.

Omnichannel retailers, or those with a physical and online presence, represented 88% of spending on Thanksgiving and Black Friday, according to the ICSC survey. Its data showed 27% of shoppers opted to order online for store pickup on those days. Among those who did, about two-thirds made an additional in-store purchase.

Retailers will have to pay for their bonanza. With retailers including Amazon, Walmart and Target having upped their free-shipping game, expect the increased online sales to lead to higher fulfillment and delivery costs.

For instance, Amazon has forecast a disappointing fourth-quarter profit after its Q3 shipping costs rose 22% to $6.6 billion, almost double its operating income. Walmart, for its part, has reported a narrower Q3 gross margin rate, hurt in part by higher transportation expenses and the increasing mix of e-commerce growth. Higher online fulfillment and other supply chain costs also hurt Target’s Q3 margin.

In addition, retailers run the risk of having to offer profit-eroding discounts to clear excess inventory, Gordon Haskett’s Grom said, adding that the industry came out of the recent Q3 earnings season with inventory growth outpacing that of sales.

“Worse-than-feared inventory forced a ‘flat-to worse’ promotional environment this year,” Nomura/Instinet analyst Simeon Siegel said, adding that Q3 was the first quarter in years when the department store segment saw inventory growth. A Black Friday offer of “40-50% off hardly seems a win; we believe Black Friday has gone from a period of management excitement to anguish.”

That’s not to mention retailers still have yet to prove the Black Friday excitement will last. Black Friday and Saturday were the only two days that ranked as the top 10 busiest shopping days in ShopperTrak’s annual forecast. The other eight days won’t come until December.

Update: This post was updated on 11/27/18 to reflect Adobe Analytics' final Cyber Monday tallies.

Related on Forbes: Here's the dark side of holiday shopping

Related on Forbes: Mall owner Macerich is making it easier for digital native brands to open stores

Related on Forbes: How Macy's is proving it's still relevant to American malls

Measure
Measure
Related Notes
Get a free MyMarkup account to save this article and view it later on any device.
Create account

End User License Agreement

Summary | 6 Annotations
On Cyber Monday, an occasion the industry invented to encourage online shopping, American consumers were on track to spend $7.8 billion and make it the biggest online shopping day in U.S. history
2018/11/27 03:17
More than $2 billion of Monday's sales, or nearly 20% of the day's total, is expected to come from smartphones, after mobile spending topped $2 billion for the first time on Friday
2018/11/27 03:21
brick-and-mortar sales on Thanksgiving and Black Friday had dropped by as much as 7% while traffic was down 5% to 9%—at least the fourth straight year when both of those measures declined.
2018/11/27 03:25
The line between physical and online sales is more blurred than ever.
2018/11/27 03:34
expect the increased online sales to lead to higher fulfillment and delivery costs.
2018/11/27 03:39
Retailers will have to pay for their bonanza. With retailers including Amazon, Walmart and Target having upped their free-shipping game,
2018/11/27 03:39