The COVID-19 pandemic and ongoing recession created a lot of uncertainties heading into Q4. This year’s Thanksgiving weekend was different from years’ past, but just how different? Here’s a recap on how retailers and consumers fared against the challenges of 2020 during Black Friday/Cyber Monday (BFCM).
The highlights #
Fewer consumers resulted in fewer dollars #
“Only” 186.4 million people shopped over the weekend, which was down from 189.6 million in 2019.
On average, consumers spent just under $312 on holiday-related purchases from Thanksgiving to Cyber Monday. Spending was down 14% from 2019 due to the recession and earlier promotions.
eCommerce broke records #
U.S. consumers spent $34.36 billion over the “Cyber 5 weekend,” breaking last year’s record of $28.49 billion. One dollar in every $4 was spent online—last year it was $1 in every $5.
Shoppers spent $10.8 billion online on Cyber Monday, dubbing it the largest shopping day in the history of U.S. eCommerce, sales increasing 15.1% from last year. While worth celebrating, the amount of growth was a slight disappointment. Sales grew by 19.7% from 2018 to 2019, without the trending pandemic eCommerce surge.
Black Friday sales increased 21.6% compared to last year, making it the second-best day for online sales in history at $9 billion. But it fell short. Some analysts projected a 39% increase year-over-year.
The slower growth rates are likely due to heavy discounting and promotions that retailers offered earlier in the season, many starting as early as October.
Consumers shopped wherever, whenever #
Mobile buying was up, accounting for 40% of all sales on Black Friday and 37% of sales on Cyber Monday. This is an increase of 25.3% from last year.
Brick-and-mortar took a hit #
Prior to the shopping event, fewer than 20% of shoppers planned to shop in stores on Black Friday. When the day came, brick-and-mortar stores saw a 52% drop in traffic compared to last year. On Thanksgiving, there was a 95% drop from 2019.
Walmart topped Amazon in growth #
This year, Walmart upped their game. It introduced free shipping to Walmart+ members, expanded curbside pick-up, and increased the quality and quantity of product promotions. So on Cyber Monday, the big-box retailer saw positive results from their efforts—150% growth in online sales from last year. That’s more than 5x the amount of growth that Amazon saw (29% year-over-year).
Bracing for impact #
To survive the increase in online shopping during the 2020 holidays, retailers and parcel carriers took extra measures to stay above water.
Early shopping and month-long deals #
Starting as early as six weeks before Thanksgiving, retailers extended Black Friday-level discounts through the months of October and November, turning Cyber Monday into a Cyber Month.
After all the delays and disruptions of this year, extending the window of promotions was one way to motivate sales and (hopefully) make it more manageable to deliver packages on time. To generate demand earlier, spread out sales, and make order volumes more manageable for fulfillment centers and parcel carriers.
Here’s what happened in a Cyber Month:
- Target saw online sales grow 156% year-over-year for the period between November 1st through November 24th. It outpaced Walmart, Etsy, Best Buy, and eBay in growth.
- Without revealing final sales numbers, Amazon said that this year’s holiday shopping season was its “biggest in history.” After pushing back Prime Day, typically in July, due to the unpredicted spike in eCommerce during the first 5 months of the pandemic, Amazon positioned itself to use its annual promotional event as the kickoff for the holiday season.
- Thirty-eight percent of consumers said they made holiday purchases in the weeks leading up to Thanksgiving.
Keeping up with demand #
As many as seven million daily packages are expected between Thanksgiving and Christmas. Parcel carriers are stretched to their limits and taking extra measures to stay afloat. The Wall Street Journal reported that United Parcel Service (UPS) imposed shipping restrictions on large retailers including Gap, Nike, Macy’s, L.L. Bean, Hot Topic, and NewEgg. These restrictions raise prices on shipping and hold merchants to volume agreements to offset the costs of hiring tens of thousands of workers for peak season.
Even though parcel carriers were feeling the burn from the influx of online shopping, FedEx managed to average 97.6% on-time delivery rate over Thanksgiving weekend, while UPS averaged 90.6%.
Retailers that adapted and offered omnichannel services increased online sales 19% more on Black Friday than the retailers that did not.
Omnichannel fulfillment wins #
Omnichannel fulfillment increased 52% over last year on Black Friday. Fewer people shopped in stores to avoid the large crowds that typically accumulate on the shopping holiday and limit their exposure to COVID-19.
To retain sales, retailers had to pivot from the traditional, door-busting, in-store experience to more socially-distanced alternatives. The solution? Provide more options for consumers to buy online, pickup in-store (BOPIS), or pick-up curbside. Retailers that adapted and offered omnichannel services increased online sales 19% more on Black Friday than the retailers that did not.
What were consumers consuming? #
Entertainment. Due to stay-at-home orders and self-quarantining, people found themselves with a lot of extra time at home. This may be why, leading up to Black Friday, the major deals were on gaming consoles and other electronics.
Consumers spent $11.2 billion on video gaming in the third quarter of 2020, a jump of 24% compared to 2019. This was perfect timing for a Q4 release of Microsoft’s Xbox Series X|S and Sony’s PlayStation 5. Both $499 consoles went on sale in early November, becoming two of the hottest items on this year’s holiday shopping list.
Other highly sought-after items include:
- Video games (Super Mario 3D All-Stars)
- HP & Dell Laptops
- Apple AirPods
- Apple Watch
- Redesigned Echo Dot
- Barack Obama’s memoir, A Promised Land
- Lite-Brites
- Revlon’s One-Step hair-dryer
- And last… but definitely not least… toilet paper
Via CNN Business(1) and CNN Business(2)
Key takeaways #
The recession and the pandemic called for consumers to shop more intentionally than ever before. Due to social-distancing guidelines, there was minimal opportunity to get door-buster deals or shop in-person for the right gift at the right price. So more consumers tried shopping for their PS5s and their Apple Airpods earlier and online. Those retailers that offered omnichannel options significantly outperformed those that did not, which is evidence that continues to prove why stores must seriously consider offering omnichannel fulfillment if they are going to survive.
As Q4 comes to a close, we will provide a more in-depth analysis of how the holidays shake out for the retail and supply chain industries. Until then, Happy Holidays!
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