Holiday Retail Sales: A Big Step for Online and Mobile


Navigator Edition: November / December 2016
By: Larry Kline and Ryan Douglas

Retailers who embrace e-commerce are giving thanks after record breaking online sales over Thanksgiving Weekend and so far through the holiday season. Many bargain hunters started their online holiday shopping Thanksgiving Day, rewarding numerous retailers who ran online promotions prior to Black Friday. Early Thanksgiving shopping did not deter consumers from indulging on Black Friday as well, as customers spent 22% more online than the previous year with $3.34 billion in online sales (as shown in Figure 1). Not surprisingly, Cyber Monday was the busiest day for e-commerce over the holiday stretch with a record $3.45 billion in online sales, making it the busiest day of online shopping ever, and a 12% increase over last year, according to Adobe. Many brick-and-mortar retailers found that this surge in e-commerce was at the detriment of in-store retail sales, as store traffic was down 1% YoY on average.

Figure 1: Thanksgiving Shopping Highlights

1 Aggregate of Thanksgiving and Black Friday store traffic.
Source: Adobe Systems Incorporated, ShopperTrak.

One of the most notable trends over the holiday weekend was mobile sales growth. Black Friday reported a record breaking $1.2 billion in mobile sales – the first time in history mobile sales exceeded $1 billion – followed closely by Cyber Monday with $1.07 billion. “Mobile firmly established itself as the dominant shopping trend, for both traffic and sales,” said Fernando Madeira, CEO and President, Walmart.com. “Mobile is making up more than 70 percent of traffic to Walmart.com, and now, nearly half of our orders since Thanksgiving have been placed on a mobile device – that’s double compared to last year.” As seen in Figure 2, 37% of all online sales were made from a smart phone or tablet while 56% of online visits were from a mobile device suggesting strong conversion rates.

Figure 2: Thanksgiving Weekend Mobile Trends

1 Includes smart phones and tablets. 2 Thanksgiving weekend is from 11/24-11/27.
Source: Adobe Systems Incorporated.

Despite an overall successful weekend for retailers in the e-commerce sales channel, performance was mixed for many others. With a strong initial start to the holiday season, many retailers are wondering if early momentum can continue through the year. The National Retail Federation President and CEO, Michael Shay, had an optimistic view on retail sales this season positing that, “all of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season.” The NRF has forecasted $655.8 billion in retail sales for 2016 (excluding autos, gas and restaurants), a 3.6% increase from 2015, which is slightly higher than the 5-year compound annual growth rate of 3.5%.

As seen in Figure 3, retailers have expressed mixed commentary on holiday sales and forecasts. A common theme among struggling retailers has been declining in-store traffic. To try and combat this trend, we are seeing more retailers launch “buy online and ship to store” platforms. Companies such as JCPenney and Stage Stores are among those that are currently testing this concept with the hopes of driving those online shoppers into the store. Retailers that are well positioned online stand to gain the most as consumers increasingly utilize digital and mobile channels. With a promising start to the holiday shopping season for e-commerce, it will be interesting to see how retailers position sales and promotions online throughout the rest of the year.

Figure 3: Recent Retail Commentary

Source: Company press releases and Q3 investor earnings call transcripts.

For more information, please contact Larry Kline, Analyst, larry.kline@firstannapolis.com; or Ryan Douglas, Manager, ryan.douglas@firstannapolis.com.

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