A Record-Setting Retail Weekend
In the aftermath of the nation's biggest shopping weekend, storeowners and retailers have plenty to be thankful for: voracious consumers blasted through modest sales projections this past weekend, spending some $52 billion from Thursday to Sunday, and about a billion more on Cyber Monday.
Though the numbers certainly seem to indicate a strong holiday sales season, experts suggest that with nearly four weeks left until Christmas, it's hardly time to celebrate. "The problem is what I would call the 'Reboot,'" says Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm headquartered in New York. "It was a very fast start, with promotions very well-planned in advance, and online sales booming. But this is a marathon, not a sprint." The weekend also puts unique pressure on small business owners, who often cannot match the deep discounts offered by bigger competitors.
The National Retail Federation (NRF) reported that foot traffic and spending were up, year-over-year, both online and in stores, while consumers spent a whopping $816 million online on Black Friday alone, according to comScore. According to the NRF's research, a record-breaking 226 million shoppers visited stores and websites over Black Friday weekend, up nearly 7 percent 212 million last year. (NRF's methodology counts an individual who shops on three separate days over the weekend as three 'shoppers.')
Americans didn't hesitate to break away from the Thanksgiving table to snag a bargain, either. Retailers saw a surge of about $479 million in revenue on Thursday—an 18 percent increase from last year.
Sales on Cyber Monday appear to have made significant gains from last year, as well. According to Shop.org, a branch of the NRF, about 123 million Americans shopped on Cyber Monday this year, up from the 107 million who shopped on Cyber Monday last year. One report from comScore suggests that sales from Cyber Monday may even reach $1.2 billion—up from $1 billion in 2010. Early estimates by IBM, which tracks retail sales, revealed an 18 percent bump. Not bad for a 'holiday' invented just six years ago by a retail trade group.
"There was definitely a huge boom this weekend," says Howard Davidowitz, who has over 35 years of retail experience. Stores were aided, he says, by unprecedented early opening hours—some doors opening at 4 a.m.—the better to attract bleary-eyed shoppers.
While big business was certainly raking it in, a bit of the holiday cheer seems to have brushed off on small retailers and brick and mortar shops. Small Business Saturday, a holiday annointed by American Express and now in its third year, encourages consumers to patronize local businesses. Though data has yet to trickle in, anecdotal evidence suggests that the weekend was a success for entrepreneurs, too.
Loree Shirazi, owner of San Diego-based The Original Paw Pleasers, which makes pet treats, said that she "saw an 800 percent increase in business" and the most foot traffic of any Saturday in more than 14 years. Maria Baugh, co-owner of New York-based Butter Lane cupcakes, says she saw business double year-over-year on Saturday, and that that's about quadruple the sales of a typical Saturday. The Fresh Diet, which provides customized daily meals for health conscious customers, brought in about $2 million in revenue over the four-day weekend—double last year's amount. Their promotion—"Undo what you just did—with an endless supply of The Fresh Diet"—was a hit.
Mary Ardapple, owner of Apple's Bakery in Peoria, Illinois, said she saw a 34 percent increase in sales from last Small Business Saturday. But in her mind, it's more than just sales that matter. "This is the first time in my entire career that I have seen acknowledgment and appreciation for small business," she says.
The weekend, however, also underscores—if not exacerbates—the problem of discount pricing for small businesses, many of which simply cannot compete with the deep discounts of big box stores. According the NRF, about 80 percent of all retailers offered discounts on Cyber Monday.
One them is Jose Prendes, CEO of PureFormulas.com, an online-only vitamin retailer. The company, which earned $9.9 million in revenue in 2010, offered a 20 percent coupon for all products on Cyber Monday—with no minimum purchase amount.
"We'll probably lose money," Prendes says, noting the sale will likely carry over into Tuesday. "But we feel pressure because everyone else is doing it. You want to do what Wal-Mart is doing, what Target is doing, what Amazon is doing. I hope that in the end it pays, because customers will be pleased with the transaction and order again. But it's a bet."