“How to save money this Christmas" is trending on Google ahead of Black Friday, reports Ecommerce Intelligence.
“How to save money this Christmas" is trending on Google ahead of Black Friday, reports Ecommerce Intelligence.
Throughout 2022, competing energies in retail have been building: A growing desire to get back out and shop following the lifting of COVID-19 precautions, and a need to pull back in the face of higher prices and tougher economy.
They've created a complicated consumer picture this year, as people have mostly continued spending and shifted toward wardrobe updates for in-person events and travel, even as inflation stayed high.
Yet the tension is set to come to a head as the holiday shopping season gets underway in earnest with the Thanksgiving weekend events of Black Friday and Cyber Monday.
So far, forecasts indicate both factors will be in play for peak season. The question is whether one will win out.
There is intent to get out and shop. After all, holiday shopping is something of a national pastime, and the chance to hit the stores may even feel like a return to normal for some after two pandemic years. A survey from the National Retail Federation and Prosper Insight & Analytics showed that 166.3 million people in the US are planning to shop from Black Friday to Cyber Monday. That’s eight million more people than last year, and the highest estimate since the survey began 2017.
“While there is much speculation about inflation’s impact on consumer behavior, our data tells us that this Thanksgiving holiday weekend will see robust store traffic with a record number of shoppers taking advantage of value pricing,” said NRF President and CEO Matthew Shay, in a statement.
Meanwhile, inflation remains at 40-year-highs, and pandemic-era savings are starting to be depleted. This is expected to take a toll on spending. About two-thirds of people surveyed by YouGov indicated that their holiday shopping will be impacted by inflation, according to data flagged by growth marketing firm Ecommerce Intelligence.
The data that we do have on retail's most important quarter so far is also conflicted, when viewed on the surface. US retail sales for October showed a bounce to grow 1.3% after Amazon, Walmart and Target held early holiday deal events. However, earnings reports from the same three retailers sounded warning bells about a consumer pullback for the fourth quarter.
One answer may lie in a nuance that lies deeper in these reports: Spending is continuing, but it is more tilted toward food, gas and essentials as prices continue to be elevated. While Walmart was lifted by groceries sales, spending on discretionary items like electronics and sporting goods and hobby items, as well as sales of general merchandise at Target and Walmart, are down markedly. That's not a good sign for holiday shopping, which is built around the kinds of nice-to-have gift items and bigger household purchases that leave retailers flush.
“Consumers have already started cutting back on non-essential shopping, and opting for the cheaper supermarkets,” said Ecommerce Intelligence Founder Ryan Turner. “Households are now saving more and borrowing less, painting quite a bleak picture for retailers this Christmas."
The pullback may also be less talked about in public forums, but digital tools can tell a story of how people are making things work, out of view. Using Google and its own analytical tools, Ecommerce Intelligence found that there is a 900% increase in people searching for “How to save money this Christmas.” To Turner, the massive increase shows that shoppers are “in a completely different landscape compared to Christmas 2021.”
This could change the look and feel of the season beyond the Black Friday kickoff, as well. Festive Christmas markets are just as subject to supply and demand as any part of the economy, and may have to scale back.
"The harsh truth is that with limited disposable income it is going to be hard for families to justify going to Christmas markets this year. There have already been some cancellations and I wouldn't be surprised to see the markets that do go ahead scaled down in size," Turner said. “Even vendors themselves are struggling to find the money to rent stalls. This might mean that vendors will have to increase the prices of products to meet rising energy and rental costs.”
However, this picture may prove conducive for online shopping, especially in an environment that is expected to be more “promotional” than ever, as many retail executives have said.
“Many online retailers are doubling down on deals and promotions in Q4 so online shoppers will be spoiled for choice in many markets,” Turner said. “Ecommerce will likely be the obvious place to get the biggest savings. We are expecting to see a period of almost non-stop sales starting just before Black Friday weekend, then running through to the end of the year – a lot of these sales will be online only.”
They may also turn to credit cards and digital options like Buy Now Pay Later (BNPL) to fund gift purchases. Some ecommerce sites are offering multiple different options to split payments into 2023, Turner said. In the YouGov survey, 47% of respondents who said inflation will impact their holiday spending indicated that BNPL solutions will be essential or at least nice to have.
An appropriate way to view the season may be as one of sacrifice. That’s how shopping rewards app Shopkick framed it in a survey of over 10,000 American consumers between November 3 - November 7, 2022. According to the results, 60% of consumers are making holiday-specific sacrifices. When asked how they plan to hold back, the majority said they plan to reduce the overall number of gifts they purchase. Others are planning to curtail travel to see friends and family, holiday decorations or hosting holiday gatherings.
During a three-year period that has been marked by economic phenomena of all kinds, the holiday season could be the time when reopening more firmly transitions to austerity. The Shopkick survey found that 61% of consumers plan to keep their budget restricted even if inflation improves. Meanwhile 55% of consumers anticipate that economic challenges will worsen over the next three months.
“Increasing prices and inflation do not appear to be going away, and consumers are tightening their belts to cope,” said Brittany Billings, EVP of marketing and strategic markets at Shopkick, in a statement. “With consumers making trade-offs this year, it is more important than ever that brands and retailers stay on top of sales and discounts for deal days and beyond as price will be the driving force behind consumer’s decision-making this year.”
Given the cultural importance of the holidays, it's doubtful that seasonal pending will go away all together. But given thethe need to hold back may outweigh the want to spend. Brands and retailers must show that they're willing to give a little to meet that sacrifice, even if they could use a little help to make it through this most crucial quarter themselves.
Plus, check out peak holiday shopping weekend results shared by Klaviyo, Wayfair and Ace Hardware.
At Amazon, 2022 delivered the "biggest ever" Thanksgiving weekend to date.
ustomers purchased a record number of products from Thanksgiving through Cyber Monday, the company said in a news release Wednesday. Amazon did not disclose sales figures, while sharing that “hundreds of millions” of products were purchased.
"This was a record-breaking holiday shopping weekend for Amazon,” said Doug Herrington, Amazon’s CEO of Worldwide Stores, in a statement. “Customers shopped millions of deals this weekend and we have many more amazing deals to come.”
It came as record sales and traffic were reported for US ecommerce as a whole during the peak shopping weekend.
Despite the growth, Amazon is still expressing a cautious approach that led it to forecast more tepid sales growth over 2021 for the all-important holiday quarter. According to Bloomberg, CEO Andy Jassy said Wednesday that inflation is leading shoppers to seek deals.
“Consumers are spending, but they’re being careful about trying to stretch their dollar,” Jassy said at the New York Times DealBook conference.
This year, Amazon sought to get an early jump on the shopping holidays to reach bargain hunters. It began Black Friday deals on Thanksgiving, as many shoppers turned to their phones after dinner. For Cyber Monday, deals started on Saturday.
Over the Turkey 5, the best-selling categories were home, fashion, toys, beauty and Amazon devices. Electronics including Echo Dot, Fire TV Stick, and Apple AirPods were the best-selling items. Other top sellers included Hasbro Gaming Connect 4, Burt’s Bees Christmas gifts, apparel from Champion, apparel and shoes from New Balance, the Amazon smart plug, Echo Show and Nintendo Switch.
Amazon said that more than $1 billion in sales were generated for US small businesses through the weekend. This includes third-party sellers that offer goods on Amazon’s marketplace and access its logistics services through Fulfillment by Amazon (FBA).
“If the news of Amazon having the best Black Friday weekend in company history is any clue, it was historic for 3P sellers in many ways,” said Jon Elder, who consults with Amazon sellers as founder and CEO of Black Label Advisor.
Elder said that the vast majority of FBA sellers experienced “tremendous” year-over-year growth through the weekend.
“Sellers noticed that customers were hungry for deals like never before and coupons played especially well,” Elder said. “Some sellers opted to not sign up for deals and still experienced historic traffic and sales.”
Sellers also ramped up PPC, or pay-per-click, in which brands and sellers access sponsored product space to appear in prominent positions on the highly-trafficked marketplace.
“With inflation on the rise, it was more important than ever to increase brand awareness through PPC ads, including video ads. Expect to see brands make this a ‘best practice’ going forward,” Elder said.
Despite all the sales ringing up, Black Friday did bring one curve ball, as a glitch in Amazon’s ad tools led to inaccurate reporting of spend that misled brands and advertisers. According to Business Insider, the sitewide reporting error caused agencies and other ad buyers to either overspend, or miss out on sales as a result of underspending. While a spokesperson said the issue was fixed, it caused a state of confusion on retail’s most important day of the year, as many were forced to wait for a fix.
Nevertheless, the weekend's overall results serve as a reminder that the Thanksgiving shopping period remains the largest weekend of the year for ecommerce, even as Amazon has introduced Prime Day and this year’s early October holiday kickoff event, which it dubbed Prime Early Access Sale.
The Prime sale events are “unique to the Amazon ecosystem, but many Americans simply don’t show up for those events as much because of the time of the year," Elder said.
"Black Friday weekend remains king and the numbers prove that."
Here are a few more key data points over the Black Friday-Cyber Monday weekend that were shared this week:
How many sales do the volumes of messages being sent by brands account for? One of the largest platforms is offering hard numbers. Klaviyo, which serves direct-to-consumer businesses, said revenue attributed to its SMS and email marketing messages reached $2.2 billion during Black Friday-Cyber Monday. That represents a 46% increase in dollars over 2021, while total order count reached 34% year-over-year. The growth was even more staggering in SMS-attributed sales alone, which grew 200% in dollars and $190 in order count.
Black Friday was the highest day for message sends, but Cyber Monday closed the gap from 2021, with 47% growth.
This came after businesses using the platform sent a combined 10.7 billion emails and text messages—up 41% from 2021.
While Klaviyo’s growth is likely a factor, it’s a fair bet that a shift toward owned marketing channels following Apple’s App Tracking Transparency played a role in this growth.
A pair of retailers in the furniture and home improvement categories released sales results showing growth.
Wayfair, the furniture home goods marketplace, reported a “low single digit sales increase” over 2021 for Thanksgiving weekend. Over the five days, 73% of the orders were from repeat customers, while “hundreds of thousands” of new customers ordered from Wayfair for the first time. Wayfair said its revenue strengthened following an early November earnings call, in which the company shared its revenue was down 10% quarter-to-date.
Ace Hardware, meanwhile, may known for its local stores, but ecommerce was the focus of its holiday update. Black Friday brought a record online sales day for the home improvement and tools retailer, posting 45% growth over 2021. Cyber Monday also saw a year-over-year jump of 33%. Ace said demand spiked for grills and smokers, electric mowers and snow blowers, while power tools also remained a popular category. In all, Ace saw a 33% increase in ecommerce sales over 2021 during the five-day weekend.
Ace sells through its ecommerce site, but its omnichannel model remains heavily linked to its neighborhood-level stores. The company said that 90% of online orders are either picked up in store, at curbside or delivered by store associates.
“Our continuous investments in the digital and omnichannel shopping experience make it easy for customers to shop Ace any way they prefer," said Bill Kiss, head of digital at Ace Hardware, in a statement.