Online Retail Grew 18.8%
Holiday 2019 sales results have been coming in since Black Friday, and pundits like me are hard at work deciphering what they mean. One thing is abundantly clear: the holiday season was good to ecommerce. According to Mastercard SpendingPulse, overall holiday sales were up 3.4% over 2018, with online sales 18.8% higher than last year. In fact, 2019 holiday ecommerce sales accounted for 14.6% of total retail, per Mastercard. Not surprisingly, Amazon said its sales were higher than they’ve ever been, thanks to all those Echo Dots, Fire TV Sticks and other gear Amazon makes and sells.
The Date of Thanksgiving Matters
In my Lessons Learned from Black Friday blog post I talked about how FDR wanted to move Thanksgiving to the third Thursday of November to provide shoppers with more time to buy presents, but Congress balked at infusing the holiday with such overt consumerism. Well, he was kind of on to something. If, in the mind of the consumer, holiday shopping begins on Thanksgiving weekend, a late Thanksgiving means fewer shopping days, and the need to be efficient in one’s shopping.
“E-commerce sales hit a record high this year with more people doing their holiday shopping online,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated, in the Mastercard SpendingPlus press release. “Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices.
As the fourth Thursday in November, Thanksgiving can fall anywhere between the 22nd and 28th of the month. In 2019 it fell on the 28th; next year it will fall on the 26th. Consumers are likely to feel crunched for time and may rely on ecommerce just as much as they did last year.
Consumer Confidence Matters
Going into the holiday season consumers were expected to spend an average of $1,500. Consumer confidence was buoyed by low unemployment rates, wages that have increased modestly each quarter including the fourth, and the stock market stayed close to its all-time high. This confidence may explain why particular categories — specialty apparel, electronics and jewelry grew by 17%, 10.7% and 8.8% respectively over last year.
But next holiday season might not be so rosy. It will kick off just 23 days after what promises to be an acrimonious election, with both parties predicting gloom and doom if the other side wins. Meanwhile, two-thirds of CEOs surveyed say they believe there will be a recession in 2020, and they just may give in to that fear by halting hiring and freezing wages. If that’s the case, any contraction will be exacerbated, leading to lower spending in Holiday 2020 (Note: I don’t mean to scare you about the coming year. A recession isn’t the same thing as a financial crisis. The financial crisis of 2008 has been dubbed The Great Recession, but it’s causes weren’t the result of the economy contracting, but of crazy bets made. Contractions are necessary adjustments, but more on that some other time.)
Kids, Kitchen and Kats
According to Amazon, toys, kitchen gear and pets were strong performers (in addition to electronics, that is). Legos and L.O.L. flew off the shelves, as did Instant Pots, coffee makers and Roombas.
Pet treats were among the most popular items, as was the Furbo Dog Camera, which lets dog parents monitor their pups from their smartphones, receive push notifications when they bark, and distribute treats remotely. Last year we learned that Americans spend an average of $126 per month on their pets, so we shouldn’t be surprised they’d shell out a few hundred dollars to keep tabs on them while at the office.
Last Minute Shoppers Saved Brick-and-Mortar
Overall department store sales fell by 1.08%, but it could have been worse. Thanks to procrastinators, Saturday, December 21 — aka Super Saturday — was a banner day for US retail, pulling in a record $34.4 billion, according to Customer Growth Partners. That’s 4x more sales than Cyber Monday 2019. Still, it’s a rather worrisome development for department stores, and probably doesn’t bode well for the next holiday season.
As we head into 2020, whatever it holds, it’s well worth focusing on the types of activities that can cement your relationship with your customers and keep your brand top of mind — many of the tactics deployed by DTC brands. We’ll help you do that by reporting on important trends in the blog, including how to craft the perfect gift guide (in time for Valentine’s Day) among other topics. Stay tuned and if you have questions about your ecommerce business and how SD can help you grow, let us know!
Written by: Phillip Jackson, Chief Commerce Officer