Weakness Seen in Black Friday Sales, Anticipated in Cyber Monday Too
by Christina Lee on December 2nd, 2008
Though more shoppers sought out post-Thanksgiving discounts this year, sales figures released so far provide little hope for high profits for the remainder of the holiday season.
Traditionally at brick-and-mortar stores on Black Friday, and more recently at online stores on the following Cyber Monday, consumers have learned to eagerly pursue some of the lowest markdowns they will see over the holiday season. But with this year’s price cuts and overall consumer behavior, experts still wonder if retailers have been able to reap any profits this holiday season.
Consumer spending over the Black Friday weekend – running Thursday through Sunday – rose by 7.2 percent among more than 172 million shoppers, up from 147 million shoppers last year, according to the National Retail Federation .
But in contrast, the International Council of Shopping Centers found that retail sales rose by only 0.1 percent from the week before and by 1.3 percent from 2007.
“Black Friday sales were good due to bargains, but one good day did not fundamentally reverse the underlying weak spending trend throughout the month,” said Michael P. Niemira, chief economist, in a statement.
Lower retail sales resulted from heavier discounts, according to Richard Shaw, QVM Group investment advisor. “From that perspective, we imagine more is less this Black Friday,” he wrote in Seeking Alpha.
As brick-and-mortar store fronts cut prices in preparation for the holiday season, more retailers than ever – above 83 percent – surveyed by Shopzilla said they intended to participate in Cyber Monday. Meanwhile, the National Retail Federation found that more than 84 million people intended to shop online that day, up from 72 million last year.
Cyber Monday traditionally represents “the first significant spike in online holiday spending activity,” said Gian Fulgoni, chairman of research firm comScore , in a statement. While that day’s sales reports have yet to be released, experts have already deemed this year’s Monday to be less of a turning point and more of a continuum for this year’s characteristically cautious consumer spending
“We expect Cyber Monday to be relatively weak, since it’s very credit card sensitive,” said Richard Hastings, consumer strategist for Global Hunter Securities LLC, to Reuters. “We’re hearing consistence reports of more use of cash and debit cards in stores. That could weigh in on Cyber Monday.”
While keeping this year’s Black Friday online sales in mind – being just slightly better than anticipated – Fulgoni still considers Cyber Monday notable, but now for a different reason.
“With so much volatility right now in the variables that influence consumer spending, predicting where this online holiday season will end up has been far more challenging that in previous years,” he said. “That said, Cyber Monday may well prove to be an important indicator of whether the decline in spending that we’ve seen during the first few weeks of the online holiday season will continue for the balance of the year.”