Retailers will need to pull out all the stops, online and off, to make up for business lost to Hurricane Sandy.
This story first appeared in the November 21, 2012 issue of WWD. Subscribe Today.
And they’re giving every indication that they’re ready to do just that as Thanksgiving, Black Friday and Cyber Monday approach.
Surveys from a number of industry groups indicate that, even before the Oct. 29 superstorm interfered with hopes for an early start to holiday shopping, retailers were set to offer some of the most generous incentives in history to attract shoppers. As one example, a survey of 40 pure-play and omnichannel retailers by the Shop.org division of the National Retail Federation revealed that 44.1 percent would offer free shipping without conditions on Cyber Monday, the biggest online shopping day of the year. That’s more than three times the 12.5 percent who offered such an enticement on the same day last year. An additional 29.4 percent will offer free shipping but with conditions, such as minimum purchase amounts.
The urgency attached to Black Friday, Cyber Monday, the Thanksgiving weekend and even, with more stores opening, Thanksgiving Day itself has been magnified by the drop-off in business during Sandy’s ruinous visit to the Northeast and its prolonged aftermath. Sandy cast a pall over the weekend of Oct. 27 and 28, arrived on Oct. 29, and its destructive force brought business to a standstill in the densely populated New York and New Jersey markets, and adjacent states, well through the following weekend.
In its first report on the effects of the storm, MasterCard SpendingPulse said that women’s apparel sales fell 6.3 percent nationally versus the prior year during the period from Oct. 28 to Nov. 10, an improvement over the 9 percent dip recorded throughout the U.S. during the first week of the period. Jewelry sales were off 6.7 percent during the first half of the period but, in keeping with their recent strong showing, rebounded with a 7.9 percent gain during the second week.
“Our research shows that Sandy clearly depressed the start to the early holiday season with the storm significantly impacting the year-over-year growth rates in key holiday categories over the first week of November,” said Michael McNamara, global solutions leader at MasterCard. “By the end of the second week, there were signs of a bounceback in several categories.”
McNamara said the affected areas in the Northeast and Middle Atlantic account for about 25 percent of total U.S. retail activity. The Saturday following the storm, Nov. 3, would have been the first weekend day in the “official” holiday season and would normally qualify as somewhere between 40 and 50 in the ranking of retail sales for the year. In 2011, the first Saturday after the start of the season was Nov. 5 and generated about $13 billion in retail activity.
“Saturdays are pretty high-volume days generally,” McNamara said, “but the Saturdays get more important as the season progresses. It’s early enough in the season that there’s time to recover, but I get the sense that a lot of retailers are spooked by the drop-off in the first two weeks. It sets up a more traditional holiday season that really does kick off more with the arrival of Black Friday than the passing of Halloween.”
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Black Friday is the biggest shopping day of the year and just missed the $20 billion sales mark last year with sales of $19.9 billion. The increase in Black Friday sales was 3.1 percent overall, excluding automotive, but 8.6 percent for apparel. For the entire weekend, the increase was 4.5 percent overall and 10.1 percent for apparel. So stores will be up against not only the weak backdrop brought on by Sandy but also hard-to-beat year-ago comparisons.
They won’t be without tools to fight back. The NRF/Shop.org survey, conducted by BIGinsight, nearly all online retailers — 97.3 percent — will offer special online promotions at some point during the Thanksgiving weekend, up from 90.2 percent last year. A record 85 percent will offer some kind of promotional incentive for consumers on Cyber Monday, up from 78.4 percent last year.
And reflecting the increasing pressure among retailers to generate revenues on Thanksgiving Day, almost half of the retailers — 45.7 percent — will offer specific online deals this Thanksgiving.
“Consumers are increasingly shopping and buying both online and in-store this holiday season,” said Vicki Cantrell, executive director of Shop.org.
Shop.org is credited with creating the term “Cyber Monday” for the Monday following Thanksgiving when online shopping peaks. Much of this activity is ascribed to consumers returning to their offices and shopping online. NRF’s holiday spending survey indicated that 56.8 percent of shoppers, or approximately 72 million people, will shop for a holiday gift while at work this year.
Adobe Systems Inc. predicted that U.S. online sales on Cyber Monday would hit the $2 billion mark, which would be the biggest day for online sales in U.S. history. Adobe said that would mark an 18 percent jump from the same day in 2011, implying year-ago sales of $1.7 billion. ComScore had pegged online sales for the 2011 edition of Cyber Monday at $1.25 billion, a 22 percent increase from the prior year.
Los Angeles-based shopping comparison site PriceGrabber.com released results showing that 41 percent of consumers planned to shop on Cyber Monday, marking a steady ascent from 37 percent last year and 33 percent in 2010. Responses came from nearly 5,000 online shopping consumers.
When the 41 percent were queried as to whether they planned to shop more on Cyber Monday than on Black Friday, which falls on Nov. 23, 58 percent replied in the affirmative, 30 percent expected an even split between the two and the remaining 12 percent said they didn’t plan to shop more on the latter date.
And a study of more than 2,100 consumers conducted for CouponCabin.com by Harris Interactive between Nov. 6 and 8 revealed that nearly half of the respondents — 47 percent — would spend more money online on Cyber Monday than they will in stores during the rest of the holiday season. Forty-two percent of smartphone owners intend to “showroom” products on Black Friday with the intention of buying them on Cyber Monday.
Recognition of Cyber Monday has also expanded rapidly, with 61 percent of respondents aware of the biggest online shopping day of the year, up from just 48 percent in the 2011 study.
While weather wreaked havoc on aspirations for early November sales, indications are that it will cooperate during the Thanksgiving period. Planalytics Inc., which provides weather intelligence to businesses, projected that generally cool, clear weather in most of the country will translate into higher demand for outerwear, boots, athletic wear, knitwear and pants and also boost traffic for the week ending Saturday.
“It looks like the weather is only going to be a help this weekend,” McNamara said.