A look at the spending data for 2017's Black Friday shows positive growth signs for many retailers, while others are still struggling to keep up with changing consumer spending behavior.
The State of Retail
A hot topic for 2017 has been the state of retailers and their viability, as online giants like Amazon and Jet.com continue to experience hyper-growth and record sales. A spending analysis of over 25 brick & mortar retail stores during the Black Friday weekend highlights positive outlooks on sales and shows signs that many physical retailers are getting creative and winning back business.
Consumers spent $205.90 at department stores this November, down 7% from $221 in November 2016. Although there is a slight dip in spending from last year, it's not substantial enough to be an indicator that retail is dying, and rather points to signs of resilience as stores work to fight back against e-commerce growth.
Meanwhile, Amazon saw a 30% bump in average spend per consumer compared to November 2016, increasing to $367 from $284.
As Amazon continues to experience this incredible yearly growth, it should be a continual sign to retailers that they need to find new ways to innovate and attract new customers. Two important retailers that have been under a microscope recently as they fight against a growing Amazon presence are Walmart and Best Buy.
Last year, Walmart acquired Jet.com, an Amazon.com competitor, for $3 billion to expand it's e-commerce growth and reach. Looking at the table below, it's apparent that their strategy is working, as the company has seen an 18% bump in customer spend compared to the same time last year.
At the same time, Best Buy continued it's "Renew Blue Strategy", a plan to revitalize the company and focus on growing an online business and better in-store experience. Although it appears that Best Buy's sales have stayed about the same compared to last November, this consistency is a good sign, considering more shoppers are buying electronics online and shopping for the lowest prices.
MAJOR RETAIL STORES
Average Spend Per Customer
Apple and Best buy both saw healthy increases in holiday spending from 2016, with 19.6% and 16.5%, respectively. At the same time, Target and Walmart both saw 18% increases in spend per customer this November.
Performance for clothing retailers was hit or miss. Some higher-end retailers, such as Bloomingdales, Neiman Marcus, and Brooks Brothers performed exceptionally well, while others like Tory Burch, Nordstrom and Lululemon saw a decrease in average spending. Overall, the entire clothing industry saw a 1.2% increase in spending.
The Big Surprises
With Sears and Toys "R" Us both battling a potential bankruptcy, it was surprising to see upticks in average spend this November. As Birch doesn't have access to both companies full sales data, this could be no indication that overall sales are up and rather just highlight the fact that consumers are spending more when they do shop there.
A Deeper Dive into Spending
Electronics and computers seemed to be the heavy hitter for Black Friday spend, with spend peaking during that week. Clothing stores saw the highest spend per user on Thanksgiving, while both Amazon and Department Stores saw their sales peak on Cyber Monday.
These are all strong signs of growing consumer spending power and support the notion that sales hit record highs for Black Friday this year. Two quick takeaways:
- Consumers are responding well to brick & mortar advertising, as evidenced by the peak in spending on the 26th
- Stores are continuing to invest heavily on their digital presence and driving digital sales, as indicated by the Cyber Monday sales spike
Black Friday and Cyber Monday had strong turnouts and healthy increases in consumer spending compared to this time last year. Stores are clearly focusing on digital sales and fighting back against a quickly growing Amazon threat that has no signs of slowing down.