Retailers have done a good job of getting shoppers into the stores — now they just have to sell them something. According to the National Retail Federation, more than 141 million Americans went shopping over the weekend but they “only” spent $407 on average, compared to $423.55 during Thanksgiving weekend in 2012. The resulting revenues of $57.4b were down 2.9% from last year.
As Breakout co-host Matt Nesto and I discuss in the attached video, the headlines make things sound worse than they are. The NRF is sticking with its rosy forecast of $602 billion in total retail, a 3.9% increase over 2012 and well ahead of the 3.5% average annual growth rate.
The reason for the optimism, despite seemingly weak numbers, is the ongoing migration to the online world. According to ShopperTrak, physical retailers saw little overall change in total spending between Thanksgiving and Black Friday but online sales rose 20%.
The fact that more people are shopping online is less surprising than the customer door-buster stampedes and fights that make the American approach to Christmas so unique.
Cyber Monday Effect
Today will be the big test for the notion that online sales will be enough to put retailers over the top for 2013. 131 million shoppers will go online today looking for online bargains. FedEx (FDX) says it will ship 22 million packages today, the busiest day in the history of the company.
Cybersales are still less than 10% of total holiday revenues but the number is growing fast enough to be material for overall retail sales. Amazon (AMZN) will surpass Target (TGT) in total revenue next year, despite Target’s somewhat amusing efforts to keep pace online.
According to Gallup, 53% of Americans plan to do at least some of their shopping online in 2013, the first time that number has exceeded 50% in the 20-year history of the poll. About 20% of the online shopping world is going to surf the mall via mobile device. It’s a staggering portion of market share for tablets and smartphones, two options that didn’t even exist 10 years ago.
It's easy to dismiss Monday as a silly marketing gimmick for online merchants. When the line between online and offline retail blurs, it makes the notion of special event days obscure as well. No one waits outside Amazon for the doors to fly open. The company is open all day, every day. Complicating matters further is the fact that it’s going to be hard for merchants to stick to the idea that deals offered today won’t be available to shoppers for the rest of the holiday season.
The Slow-Growth Reality
The simple reality is retail sales reflect the economy as a whole. It’s tempting to draw sweeping conclusions from the headlines about this being "The Worst Christmas Since 2009" but the reality is that America is seeing exactly the kind of shopping you’d expect in an enviroment of rampant deflation in big-ticket items and almost no growth in GDP. When the final numbers get posted early next month, this Christmas will look a lot like last year.