Cyber Monday: Consumers Scour the Internet for Online Deals
Consumers are scouring the internet for online deals as they begin to cap off the five-day post-Thanksgiving shopping bonanza with Cyber Monday.
Even though e-commerce is now part and parcel of our everyday lives and much of the holiday shopping season, Cyber Monday –- a term coined back in 2005 by the National Retail Federation –- continues to be the biggest online shopping day of the year, thanks to the deals and the hype the industry has created to fuel it.
Adobe Analytics, which tracks online shopping, expects consumers to spend between $12.0 billion and $12.4 billion on Monday, making it the biggest online shopping day of all time.
For several major retailers, the "Cyber Monday" sale is a days-long event that begins over the weekend. Amazon's, for example, kicked off on Saturday and runs through Monday. Target's two-day event began overnight on Sunday, while Arkansas-based Walmart kicked off its most recent discounts Sunday evening.
Consumer spending for Cyber Week — the five major shopping days between Thanksgiving and Cyber Monday — provides a strong indication on how much shoppers are willing to spend during the holiday season.
Resilient Shoppers and Cautioned Economists
Despite stubbornly high inflation, shoppers have remained resilient this year. Inflation recently reached its lowest point in more than two years, but it is still evident in areas such as auto and health insurance, as well as some groceries like beef and bread. However, economists have cautioned that strong spending is likely to decrease in the coming months.
Stressed Consumers Seek Deals
Stressed consumers are relying on their savings to fuel their shopping habits. They are also facing increasing pressure from credit card debt, which has been on the rise along with delinquencies. Additionally, shoppers have been embracing "Buy Now Pay Later" payment plans, allowing them to make payments over time without interest charges.
The National Retail Federation predicts that holiday shoppers will spend more this year compared to last year. However, the pace of spending is expected to slow, with a projected growth of 3% to 4% compared to 5.4% in 2022.
A clearer picture of consumer spending will only emerge once the government releases sales data for the holiday season. However, preliminary data shows some positive signs for the retail industry.
According to recent data, online sales experienced a notable increase of 8.5%, while in-store purchases only saw a modest rise of 1.1%. It is important to note that these figures have not been adjusted for inflation, which suggests that real in-store sales may have actually declined due to higher prices.
Furthermore, other statistics indicate that Black Friday witnessed a surge in store traffic, reminiscent of the pre-pandemic era, with large crowds flocking to stores across the country.
Sensormatic's Head of Retail Consulting and Analytics, Grant Gustafson, highlighted that this year's Black Friday marked the most significant increase his organization has observed in recent memory.
Gustafson stated, "This serves as a reliable indicator of what we can anticipate for the rest of the holiday season. The overall trend in foot traffic is an encouraging sign not only for physical retail but also for e-commerce, indicating that consumers are willing to spend when they discover significant sales."
Black Friday Sees Growth in Various Categories
Black Friday saw significant growth in several categories, including electronics, clothing, toys, and jewelry, according to Adobe. Health and beauty products, as well as sporting goods, also experienced notable sales increases. This year, retailers started offering holiday deals as early as October, a trend that began during the COVID-19 pandemic and has continued due to supply chain issues and inflation concerns. However, many consumers chose to wait until Black Friday to make their purchases.
Mickey Chadha, a retail expert and vice president at Moody's, predicts that discounts will remain strong in the coming days. This is primarily due to higher inventory levels, especially in discretionary categories, compared to demand. However, Chadha also notes that the deals may not be as good as last year when retailers had more items in stock.
Flat Discounts Compared to Last Year
Jefferies, an investment bank that tracked 54 retailers during Black Friday, reported that a majority of them offered flat discounts compared to last year. Despite this, Salesforce's data revealed that discount rates rose to 30% in the U.S. on Black Friday, which enticed customers to make purchases.
"They're once again playing a game — and winning the game — of discount chicken, where they wait for retailers to discount to where they feel most comfortable," said Rob Garf, vice president and general manager of Retail at Salesforce. "And that's what's happening."
According to statistics from Adobe, consumers spent a total of $10.3 billion over the weekend, surpassing the spending on Black Friday. This increase in spending can be attributed to the higher discounts offered this year. On Thanksgiving Day alone, shoppers spent an additional $5.6 billion, marking a 5.5% increase compared to last year. This amount is nearly double the online spending in 2017, indicating the ongoing trend of shifting towards online shopping during the holiday season.
In addition to traditional retail, the resale industry is also expected to play a significant role in holiday shopping. Resale markets such as Facebook Marketplace and ThreadUp, as well as brands like Canada Goose, Patagonia, and Coach, are predicted to account for 17% of holiday gifts this year, according to Salesforce. These options cater to environmentally-conscious consumers and those who appreciate vintage offerings.
