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Retailers are promoting deep discounts now to get shoppers primed for Black Friday

November 23, 2016 02:53 PM
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Online shoppers looking for a new wardrobe didn’t have to look far to find a bargain on the day before Thanksgiving.

Apparel manufacturer Gap Inc., No. 20 in the Internet Retailer 2016 Top 500 Guide, held a Black Friday early access sale, emailing shoppers to let them know it was offering 50% off everything it sells online on Wednesday. J.Crew Group Inc. (No. 49) followed suit on both its full-price and factory site, offering shoppers 40% off merchandise on its full-price site and 50-60% off all online purchases on its factory site. Neiman Marcus (No. 36) also got into the act, holding a pre-Black Friday flash sale offering 40% off dresses and other items.

Kohl’s Corp. (No. 19) tried to woo shoppers with online-only Black Friday deals available Wednesday through Friday. Target Corp. (No. 22), meanwhile, emailed shoppers to notify them of early access to select Black Friday deals on Wednesday.

These pre-Thanksgiving discounts weren’t limited to apparel. Office Depot Inc. (No. 9) tried to attract consumers with an online-only early Black Friday sale that ends at 11:59 pm Eastern Wednesday, offering shoppers savings of up to 60% off.

Bloomberg reported that online marketplace eBay Inc. is billing today as “Mobile Wednesday,” promoting deals aimed at consumers who are traveling and shopping on their mobile devices.

Online spending growth slowed to just 1.35% in early November, led by a sharp decline on Nov. 9, the day after the election, according to Adobe Inc.’s  Adobe Digital Insights unit. But consumers seem to have rebounded.  “The election wave seems to have passed our customers,” says Darren Hill, CEO of e-commerce platform provider WebLinc Commerce. “People are spending and shopping around with so many early promotions from retailers at their fingertips.”

Overall online sales are up 3.5% year over year from Nov. 1-22, according to the Adobe Digital Index, and that’s about $780 million short of Adobe original projections. Becky Tasker, managing analyst at Adobe Digital Insights, attributes the initial slowdown in online spending to anxiety over the 2016 presidential election.

“It looks like things have normalized a little bit, and that started on Nov. 12,” she says. “Everything looks to be on par right now. We’re waiting for total day results (for Wednesday), Thanksgiving and Black Friday to see if we’re revising [our holiday forecast].”

In October, Adobe predicted that every day of the 2016 holiday season starting Nov. 1 would eclipse the $1 billion mark in online sales. So far, 21 of 22 in November have eclipsed that milestone, Tasker says, though she declines to say which of the previous 22 days fell short of $1 billion.

According to Adobe’s data, the lion’s share of online sales (71%) and web traffic (53%) is taking place on desktop devices, with desktop conversion rates (3.2%) outpacing tablets (2.9%) and smartphones (1.3%).

Online retailers are apparently doing a better job of keeping items in stock, according to Adobe, which is reporting an out-of-stock rate of 5.2% so far this holiday season compared with 7.6% this time last year. Tasker expects that figure to increase as retailers get deeper into the holiday season.

“My hunch is as these big days come on, those rates will go up,” she says.

Shoppers who are looking to buy sporting goods are paying about 11% more this year than they did last year. Tasker attributes that to decreasing competition in that category. In September, golf equipment chain Golfsmith International (No. 218) filed for bankruptcy. Sports Authority (No. 287) filed for bankruptcy and liquidated its assets in April. Less availability and weaker competition likely is contributing to higher prices, she says.

Retailers are devoting less of their marketing resources to referral sites, according to Adobe. Ad spend on referral sites is down 17% year over year, the company says, with that money instead going toward email marketing, display advertising and social media.

 “We saw this interesting strategy of these winning websites investing in channels that could be personalized or targeted to the audience. Email is a great example of [personalization].”

Adobe predicts online sales will increase 6.9% year over year during the five-day period of Thanksgiving through Cyber Monday. Others are more optimistic. Rod Sides, head of the retail practice at Deloitte LLP, predicts online sales will grow in the 15-17% range during that span, while Andrew Lipsman, vice president of marketing and insights at comScore Inc. anticipates a “double-digit” increase, declining to specify further.

 

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