By and
with contributions from Sharon Edelson
 on November 27, 2018
Mobile is a big component of the shopping experience.

Consumers continued to click with merchants this Cyber Monday.  

Retailers were on track to rake in a record $7.8 billion in sales for the day, up 17 percent from a year ago, according to Adobe Analytics.

If that sales haul materializes, it will top the record $6.2 billion that was spent online during Black Friday and the $3.7 billion clocked on Thanksgiving Day, which has become a big shopping day in itself.

More sales are set to take place on smartphones, with Cyber Monday projections calling for more than $2 billion in sales on the go.

The continued growth of online holiday shopping marks something of a payoff for retailers, which have ploughed millions of dollars into improving technology, helping consumers feel safer to shop from the comfort of their own homes or offices rather than brave the crowds at brick-and-mortar stores.

The start of the holiday shopping season often amounts to a stress test for technology. Alongside tech giants Google and Facebook, which suffered glitches in their respective ad platforms in the week leading up to Black Friday, J. Crew admitted to technical problems with its web site during the critical Black Friday shopping period. Consumers flocked to social media to complain about issues with signing in and completing orders. The preppy brand issued several mea culpas and a pledge to “make it right” by extending its Black Friday deal for 50 percent off through Sunday.

In terms of apparel deals, several companies pushed their promotions into Cyber Monday and beyond. The Gap features a Black Friday deal of 50 percent off sitewide plus an extra 10 percent off on online specials, while Kohl’s has been advertising 20 percent off everything for its so-called Cyber Week, which runs from Saturday to Wednesday. 

In all, apparel is expected to continue its positive run from Black Friday, especially cold weather commodities like coats and snow boots, with reports over the weekend that Canada Goose Holdings Inc., VF Corp.-owned Timberland and Uggs all did well.

But it’s toys, especially Lego sets, that are forecast to be the biggest seller on Cyber Monday as retailers like Amazon, Walmart Inc. and Target Corp. capitalize on the demise of Toys ’R’ Us. Target slashed as much as 30 percent off select toys, while Kohl’s was discounting Lego sets by as much as 40 percent.

Toys were also a key category for Walmart.com, which saw plenty of interest in items such as Lego sets and L.O.L Surprise dolls. Interestingly, classic board games were also top sellers including Connect 4, Sorry!, Chutes and Ladders and Candyland.

Fun stat: Walmart will have shipped enough toys during the Thanksgiving weekend from its fulfillment centers to give one toy to nearly every person who visits Disneyland over a three-month period. Walmart will have shipped enough home products during Thanksgiving weekend from its fulfillment centers so that nearly every person flying home from the holiday on Sunday could have received a new Instant Pot, Dyson vacuum or other popular home item.

Overall, Walmart said it will have shipped millions of packages over Thanksgiving weekend.

Some of those packages will contain the big-box giant’s latest tech deals. In addition to toys, its top-selling Cyber Monday products included electronics such as iPads and TVs, gaming consoles and video games, and home products such as Dyson vacuums and a Pioneer Woman baking set.

Cyber Monday deals at the retailer’s Jet.com operation were also heavy on the gadgets. For example, the Samsung 55” Class Frame 4K, $1,297.99, $500 off; Apple MacBook Air 13.3” versions, $1,049.99, $250 off and MacBook Pro 12-, 13- and 15-inch models discounted $250.

Jet.com shoppers also have the extra benefit of satisfying their tech and fashion cravings all in one trip. The site’s fashion deals include 30 percent off Hunter women’s original tall rain roots, $104.99; Ugg women’s Amie boot specially priced at $150; three-quarter-carat diamond studs set in white gold, $224.99, a 25 percent discount, and Asics Women’s Tiger top is 34 percent off at $24.96.

As for whether retailers were trimming more off the price than Black Friday, Stephanie Wissink, an analyst at Jefferies, said she noticed some deeper discounts extending into Cyber Monday, with some sites that had offered 20 percent off now featuring 30 percent off. 

At the same time, many retailers are sweetening the deals with free shipping. Both Amazon and Target, for example, have been advertising free deliveries with no minimum order limits.

What may separate this year from previous kickoffs to the peak shopping season is timing. The 2018 holiday rush, in fact, began earlier and looks a bit more like a marathon than a sprint.

“Our hypothesis after last year and going into this year was that — given the ubiquitous nature of the mobile device — more and more deals, and more and more shopping would occur earlier in the holiday week,” said Rob Garf, vice president of industry strategy and insights at Salesforce and member of NRF Digital Council, told WWD. “And that’s, in fact, what we saw.”

He explained that, in previous years, Thanksgiving and Black Friday were as much about product research and waiting for big deals — with “consumers playing somewhat of a game of ‘Discount Chicken,’ if you will,” he said. “They were hoping there would be that bigger deal on Saturday and then certainly a peak on Monday. But what we found is that consumers, shoppers, aren’t just waiting for Cyber Monday for those discounts. Rather, they are jumping on the opportunity to finish their shopping earlier.”

Black Friday brought a 13 percent increase in revenue, year-over-year. It also brought a noteworthy conversion rate, the highest of the year so far, nearing 5 percent — which itself was a 37 percent increase from Thanksgiving. “So what this has told us is, consumers aren’t just browsing, leading up to Cyber Monday, but they’re actually purchasing,” Garf said.

Salesforce was expecting Monday to bring in spikes, in terms of discounts, conversion and sales. But its numbers show a smoothing out of demand for the entire Cyber Week, as it defines the period between the Tuesday before Thanksgiving through Cyber Monday.

Wells Fargo analyst Ike Boruchow challenged that notion. He doesn’t expect retailers to stretch themselves too far, noting that, in comparison to last year, overall promotions on Black Friday were essentially flat to slightly lower.

“This, of course, lends more credibility that retailers can once again have a successful 4Q (last week’s results imply that for the second year in a row most companies are not ‘in the hole’ heading into December), with positive reads into both sales and margins,” he said in a note to clients.

Craig Johnson, the founder of Customer Growth Partners, added that the key takeaway from Black Friday and the weekend is that that shoppers and stores alike “will have a happy holiday this year — assuming retailers can maintain their margin discipline.” He is forecasting that 2018 will enjoy the second year of 5 percent-plus retail growth for the first time since 2005–2006.

Part of what’s driving eyeballs to retailers online is social media, which looms larger this year than before, especially for apparel and footwear, as well as health and beauty. “What we’re finding is that, over the holiday, there’s been a spike in those consumers going to social media and clicking through to a retailer’s web site or digital entity,” Salesforce’s Garf added. “We saw that most pronounced on Thanksgiving, where 7.5 percent of all digital traffic was from social platforms.”

In the social sphere, Facebook and Instagram were the dominant forces, accounting for 94 percent of social traffic in the U.S. and Europe. “That’s a 40 percent increase year-over-year on Thanksgiving,” he said.

According to a survey of 4,463 consumers from Influenster, which looked into what matters most to consumers during the two biggest shopping days of the year, about 67 percent said they’ll shop on both Black Friday and Cyber Monday, with 34.5 percent of those polled claiming they’ll have bigger budgets than last year, 47 percent saying they’ll have the same budget as last year, and 18.2 percent saying they will have less money to spend.

The report also goes into the top influential factors for shopping decisions. About 95 percent will check reviews before making a purchase. Consumers on Cyber Monday are most influenced by online reviews, 72 percent; social media is the most important factor for 64.3 percent; web sites, 40.99 percent; word of mouth, 44.88 percent, and catalogs and television commercials tied with 7.25 percent.

Respondents gave free shipping a big thumbs up, with 64.77 percent saying it’s an important factor in shopping online. Mobile wins on Cyber Monday, with 53.22 percent of shoppers saying they’ll shop from a mobile device or tablet and 46.78 percent using a laptop or desktop computer. Clothing reigned supreme in terms of product categories, with 85.88 percent of those surveyed saying they’ll buy clothing, followed by cosmetics and fragrance, 62.27 percent; electronics, 62.27 percent; shoes, 62.35 percent, and home decor, 54.15 percent.

The top apparel brands according to this survey: Forever 21, American Eagle, Urban Outfitters, Zara and Free People.

Deals and motivated inspiration may be driving this season’s shopping behavior, but they’re not alone. Economic and political forces are also fueling new levels of consumer confidence.

Consumers have been feeling better off thanks to a strong labor market. Unemployment hovers at a 49-year low, while pay, which has been lagging by most other positive economic indicators, recently broke through the significant 3 percent barrier for the first time since the recession.

Investors, however, are nervous that this may not last too long into next year, with the Federal Reserve steadily increasing interest rates from its crisis-induced, record-low levels. While this so far hasn’t impacted consumer spending, the concern for retailers is that maintaining credit-card balances, student loans and many mortgages will become more expensive as rates continue to edge upward and that could lead consumers to start to curb discretionary spending. In addition, investors are worried over the rising costs retailers face in terms of paying for all that free shipping, plus investments in store remodelings and infrastructure to compete with the likes of Amazon.

“As interest and other costs rise, Moody’s expects consumption to grow at a slower pace in 2019, unless higher-than-expected business investment growth boosts demand for labor and rising wages bring more people into the workforce,” said Atsi Sheth, a managing director at Moody’s. 

Then there are tariffs, as the trade war between the U.S. and China shows no sign of abating. To date, it hasn’t weighed on consumers much, but that is expected to change as soon as tariffs on a raft of consumer goods will rise from 10 percent to 25 percent at year’s end.  

Major retailers have already warned they will be left with little choice but to raise prices. And the situation could get even worse — reports indicate that the administration is tentatively preparing more tariffs, in case the planned talks between President Trump and Chinese President Xi don’t go well next month.

After a dreary trading day Friday where the leading indices finished the week in the red, investors were cheered Monday on the back of signs of a strong Cyber Monday, as well as a stable oil price. The Dow Jones Industrial Average closed up 354.29 points, or 1.46 percent to 24,640.24, while the S&P 500 was up 1.55 percent to 2,673.45.

The day’s biggest winners included Vince Holding Corp., up 10.9 percent to $14.19; L Brands Inc., up 6.7 percent to $31.99; Fossil Group Inc., up 6.7 percent to $21.40; American Eagle Outfitters, up 5.5 percent to $20.62, and Amazon, up 5.3 percent to $1,581.33.

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