Christmas Present/Holiday Recap
Posted: December 31, 2013
Both pure online retailers and brick-and-mortar websites guaranteeing receipt of gifts in time for Christmas had to eat crow, when thousands of packages were delayed at UPS and FedEx because of the crush of last-minute orders. While online sales account for only around 6% of total sales, the last shopping weekend before Christmas illustrated the power of the web, when internet sales jumped 37% from the year before, according to IBM Digital Analytics. Market research firm Forrester Research expects online sales to increase 15% this holiday season amid slow mall traffic and weak sales at brick-and-mortar retailers.
Looking at what caused the lull with brick-and-mortar, many industry observers believe the super-hyped promotions in stores over the Thanksgiving/Black Friday weekend created an artificial high and subsequent low for the days heading up to Christmas.
The fact that there were six less shopping days than last year due to a late Thanksgiving didn’t help brick-and-mortar sales, which decreased about 3% this year. Bad weather was another factor that affected lower sales and decreased foot traffic, which was down over 21% this year.
But, the mind-boggling last-minute online order rush pushed UPS and, to a lesser extent, Fed Ex, beyond its limit of being able to deliver for Christmas. Even the industry experts didn’t foresee the online onslaught of ordering.
Retailers including Wal-Mart, Amazon and Kohl's have started issuing customers gift cards and refunds for shipping costs and items that didn't arrive before Christmas. Those retailers are expected to seek reimbursement from UPS or other carriers that had guaranteed arrival times.
Amazon experienced its best holiday yet, with 36.8 million items ordered globally on Cyber Monday, or 426 items per second. Amazon also reported that over 1 million people joined its Prime service during the third week of December—another record. (Regardless, Amazon still has yet to make a profit.)
Reviewing the biggest selling product categories, Video Game Consoles and Accessories topped the list, followed by Apparel & Accessories, Consumer Electronics (bolstered by smartphone sales), Computer Hardware (with tablet sales leading the pack), and Home & Garden.
Across the country, shoppers will be out and about, using their gift cards to get the best possible deals. The next two weeks may well change total holiday sales numbers substantially, since stores are anxious to move products off the shelves, and shoppers will see substantial markdowns to that effect. Macy’s, Old Navy, Target, and Wal-Mart will be offering major discounts. As part of the big year-end push, Macy’s had buy-one-get-one-free deals on men's dress shirts and suits. Sears offered up to 40 percent off on appliances and Sears-owned Kmart said "Shop Your Way" members could receive 50 cents off per gallon of gas when they spent $25 or more on specific Procter & Gamble products.
While the exact numbers aren’t out yet, companies who measure retail customer satisfaction said sentiment was clearly down over last year with online retailers. So how can brick-and-mortar capitalize on this?
Savvy retailers will continue to strengthen both offline and online capabilities while investing in omni-channel capabilities that bridge the two and allow them to leverage their brick-and-mortar stores, and their associates, to compete and thrive.
Seeking the expertise and talent pool of retail staffing firms in supplying the necessary staff will also be crucial to a store’s success.
One thing is pretty clear about holiday shopping: When the weather turns sour, consumers turn to their tablets and mobile devices to shop, but brick-and-mortar retailers still have the edge. Barring inclement weather, people still flock to stores to go shopping.TAGS: retail, retail trends, work in retail, retailers, management, holiday spending, holiday sales,