Were record Cyber Monday/Week sales enough to help retailers salvage 2020?

Discussion
Sources: J.Crew; Best Buy; Amazon; Target
Dec 02, 2020
George Anderson

Online sales during this week’s Cyber Monday event grew 15.1 percent year-over-year to around $10.8 billion, according to Adobe Analytics. Now, the question is whether those online sales combined with others made earlier in the month are enough to help retailers overcome any damage done to their businesses as a result of the novel coronavirus pandemic.

With Cyber Monday in the sales column, consumers have spent $106.5 billion online during the season to date. It took nine more days for online sales to top $100 billion in 2019, according to Adobe, which analyzes visits to 80 of the largest retailers in the U.S. Based on performance to date, the tech company is forecasting online sales will increase 30 percent over last year, down from an earlier estimate of 33 percent growth.

Consumers were attracted to purchase based on deals in categories including computers, consumer electronics, sporting goods, appliances and toys. With discounts expected to be pulled back between five and 10 percent as the season progresses, retailers may see some slough off in sales compared to past holidays.

Retailers of all sizes got a sales lift from their Cyber Monday events. Large companies saw sales jump 486 percent over their daily averages in October. Small merchants achieved even bigger percentage gains at 501 percent.

Consumers were more likely to use mobile devices and retailer apps in placing orders this year than last, with 37 percent of those making purchases using their phones.

Curbside pickup was also in strong demand, a continuation of a trend established earlier in the year when many stores closed to walk-in customers or limited the number of shoppers at any given time.

Research by Salesforce found that offering various pickup options was sales positive for retailers that provide the services versus those that do not. U.S. retailers with curbside, drive-through and in-store pickup saw digital revenues jump 29 percent during Cyber Week, compared to 22 percent at businesses that did not.

Salesforce has estimated that as many as 700 million packages will face shipping delays over the holiday season and that earlier cutoff dates will make curbside and other pickup options even more attractive to shoppers.

DISCUSSION QUESTIONS: Will online holiday sales gains be enough to help retailers recoup sales lost as a result of the pandemic? Are pickup options such as curbside becoming table stakes for retailers selling products online?

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Braintrust
"The answer to this very much depends on what segment the retailer operates in."
"There is ample demand this holiday season and the best retailers have spaced it out over a longer period of time to support safer environments, delivery and inventory..."
"...retailers with the most flexible supply chains and omnichannel technology in place, have in fact made up for much (if not all) of the loss."

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23 Comments on "Were record Cyber Monday/Week sales enough to help retailers salvage 2020?"


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Jeff Weidauer
BrainTrust

Online sales are already at record levels, so there is ample demand. The challenges now are supply and shipping options. Even so, a few weeks of record sales isn’t likely to make up for months of lackluster results.

Neil Saunders
BrainTrust

The answer to this very much depends on what segment the retailer operates in. Despite the gloom, some retailers have done very well out of this pandemic – including the grocery players and home-related players. Those retailers will end the year on a high note. Others, such as apparel players and department stores, are seeing some signs of recovery but there still isn’t enough traction – online and in stores – going into the holidays to plug the massive holes in their sales lines and balance sheets.

Jason Goldberg
BrainTrust

The overall retail metrics are going to look decent for holidays but that will obfuscate the fact that there are clear winners and losers.

If you’re in electronics/toys retail, high e-commerce sales will offset slow in-store sales to yield modest growth for the season.

If you’re a grocery or DIY/home retailer, you’re going to benefit from a lack of spending on restaurants and travel and have a great holiday.

If you’re an apparel retailer, a mall-based chain, or a department store, it’s going to be a very difficult year.

One problem with digital forecasts this holiday is that we have $9 billion a month in spending that used to happen in restaurants and that now is happening in grocery stores, and an unprecedented portion of that is online grocery. So when we look at overall e-commerce activity leading into holiday it looks very high, but it’s actually not holiday spending. So it inadvertently elevated the holiday forecast.

Richard Hernandez
BrainTrust

While online sales have increased double and triple digits since the pandemic, it is still not enough to compensate for the brick-and-mortar sales. Many businesses have had to adapt quickly and add curbside and BOPIS if they had already not done so before. This has become the norm and those that did not adapt quickly have not fared so well.

Rich Kizer
BrainTrust

Curbside is here to stay. It’s easy, and customers will continue to use it year round. The challenge is getting them to walk the aisles without having to buy them in with loss of margins. Very importantly, can or will retailers recoup lost sales because of the pandemic? I fully believe they will! This environment has produced the sharpest, most agile consumer focused retailers in our history. My bet is we will see some margin reductions to get the customers in, but brilliant retailers will find a way to increase purchase size. That’s my bet.

Richard J. George, Ph.D.
BrainTrust

Depends on the type of retailer; grocery, electronics, DIY, etc., should continue to perform well. Plus those retailers with a robust omnichannel presence who have figured out the last mile and delivery logistics will succeed. While a rising tide lifts all boats, a receding tide can leave some high and dry if they don’t have the foresight and equipment to motor to a safe harbor.

Matthew Pavich
BrainTrust

Similar to the Black Friday discussion, this year is different and will most likely not result in success based on one or two selling days or events. There is ample demand this holiday season and the best retailers have spaced it out over a longer period of time to support safer environments, delivery and inventory challenges. They’ve also offered superior channel experiences with curbside being a prime example. It doesn’t hurt, however, to have a good Cyber Monday!

Ricardo Belmar
BrainTrust
Depending on the metrics used to gauge success, the holiday season may look better than last year, but it’s hiding certain factors that may skew the analysis. It does seem consumers were successfully encouraged to shop early for the holidays which pulled seasonal sales into October, starting with Amazon’s Prime Day. This makes spending trends look good going into Black Friday/Cyber Monday. However there has been a strong focus on online sales vs in-store sales in these analyses. In-store traffic over BFCM was down (depending on who’s measuring) by around half compared to last year. That was expected due to the pandemic and shoppers not wanting to visit crowded locations. Retailers, accordingly, didn’t offer doorbuster sales to try and keep those crowds low and instead incentivized e-commerce and curbside pickup options. So again, we have elevated online sales figures making the season look good overall. However when we add in-store sales to this equation we see that while those shoppers that went to stores had higher conversion rates (they had strong intent to buy going… Read more »
Bindu Gupta
BrainTrust

The record Cyber Monday/Week sales should help certain retailers recoup some of the sales lost as a result of the pandemic. It will depend upon the type of retailer for sure and how they have pivoted to meet changing consumer preferences plus the efficiency of the supply chain for on-time deliveries.

Rodger Buyvoets
BrainTrust

Unfortunately, it’s not as clear cut as that. To know if it’s enough depends on the retailer, vertical, target audience, and emphasis on in-store sales. Many online retailers have still experienced growth during this year – these generally being the more digital-savvy brands. For brands like Macy’s and Sephora that rely heavily on in-store sales, it’s hard to know if this will be enough. But it certainly won’t hurt.

Steve Dennis
BrainTrust

One thing we know from the past is that performance on any particular day during the holiday season is a poor predictor of the whole season. Having said that, it’s hardly news that e-commerce set a record. That’s been true just about every single day for 20 years. The news about Cyber Monday is that the increase fell well below the trend of the 30 percent to 35 percent increases we have been seeing during the pandemic. Given the widespread discounting and growing consumer awareness of likely shipping issues, this is concerning. The bigger story, of course, is less about aggregate spending (no one is the average), but the continued and accelerating bifurcation we see among sector and individuals retailers, as I just posted about on Forbes.

Paula Rosenblum
BrainTrust

Salvage the year? For retailers selling apparel that is not leisure-related you cannot salvage the year. Three to four months were lost. You can’t fix that, and people are still home.

Those who have done well, will continue to. Those who have not, sadly, will not, and the independents who closed will never return.

Gene Detroyer
BrainTrust

Net-net, it all depends on the cash in people’s pockets. There is nothing on the horizon to suggest people will be better off now than they have been. As a matter of fact, the population, without further stimulus is worse off than they were in the last nine months.

I would not look for any retail rescues.

Ralph Jacobson
BrainTrust

Online commerce has been the lifeline for retailers this year. The tragedy is for those small, local retailers that had to close for good due to restrictions. Shoppers have gotten comfortable with online shopping, so those merchants that provide the most effortless experiences will thrive in the future.

Natalie Walkley
BrainTrust

There are many factors that would determine how a retailer has performed in 2020: industry, target audience, size of the business, distribution network, channels, etc. What we have seen with customers is that retailers with the most flexible supply chains and omnichannel technology in place, have in fact made up for much (if not all) of the loss. This includes some of the other under-performing industries at large, which tells us that omnichannel technology and distribution networks are critical factors.

Patricia Vekich Waldron
Staff

While the sales increases are encouraging, it is doubtful that they will make up for sales declines throughout 2020 and shipping/return costs.

Craig Sundstrom
Guest

I don’t get it: we talk — no, preach! — “omnichannel,” endlessly, then ask a question that can be answered effortlessly: will online be enough? Gee, why don’t we just look at total sales and see! (As if it ever makes any sense to look at online and in-store independently.)

My suspicion is that no it will not: there are whole sectors that have made little progress in transitioning — or are simply unable to — and there is also this little thing called mass unemployment/economic uncertainty going on.

Jeff Sward
BrainTrust

2020 is beyond salvage at this point. A couple of ecomm surges don’t come close to repairing the cumulative damage experienced to date. And for many retailers and categories, the shift to ecomm comes at the expense of profit margin. The steepest hill of all, which is sales we are up against between today and December 24th, is still in front of us. And that will be a daunting hill to climb.

The full story will not be known until some time in late January when the dust settles on the bulk of post Christmas clearance sales and post holiday returns. When retailers start reporting 4th Q numbers some time in March, I suspect we will be hearing about some pretty scary stories.

Ananda Chakravarty
BrainTrust

Nope. The year has been plagued with a terrible fallout of retailers unable to cope. If you look at the market as a zero sum game (not actually the case, but for illustrative purposes), this has been more of a business handoff in many avenues. Restaurants to grocery; Apparel to home fitness; Travel goods to home improvement; hospitality to electronics; and so on. Companies with necessities such as grocery or convenience will see great turnout. Online sales just isn’t a separate factor — retailers are still looking for in-store traffic, putting up with added safety costs and training and encouraging purchasing. All these things continue to move the market with essential companies boosting profitability. Curbside is maturing and we’ll see customer experience (and service) continue to become more pronounced.

Brandon Rael
BrainTrust

As the pandemic fueled great digital acceleration, we have already seen e-commerce rates rise between 16-20% of the total retail numbers. We are dealing with a very dynamic situation, and the rules of engagement are being rewritten by the week.

Essential businesses, such as grocery stores, pharmacy retailers, home goods, health, beauty, wellness, and lifestyle companies, have thrived during the pandemic, especially those who have taken a digital-first strategy. Retailers and all businesses have had to pivot their operating models to accelerate their digital and customer-first strategies.

While Black Friday and Cyber Monday/Week may not make up for the 30-40% consumer traffic shortfalls, the story is not as bad as we may have feared. Hopefully, this year is an aberration, and we turn to 2021 for a semblance of normalcy and economic recovery.

Kai Clarke
BrainTrust

No. Online sales cannot salvage a poor sales year of on-ground, traditional sales at retail. Online is helping as it allows people to better adapt to the effects of the pandemic and the impact on our communities.

Kenneth Leung
BrainTrust

This depends on the retailer and the target customer base, and how much physical store space they are committed to. Stores like Target have done well stocking what people wanted in one location while department stores who already struggled with foot traffic in-store are challenged to deliver their value online. This is one of the those years that you have to look at the micro- and not at the macro-level numbers.

Casey Craig
BrainTrust

This past holiday shopping weekend may be down from last year, but numbers show that they are still on par with previous years, which is promising for retailers. It is unclear if holiday shopping will save retailers from their 2020 losses, however, the retailers who have an online presence will have better results than those who depend on their brick and mortar stores for business.

Curbside pick-up, delivery, and other BOPIS options are key features for retail this year that aren’t going away even when the pandemic has passed. Around 95.7 million shoppers bought online this year, which is an increase of 44% from 2019. These numbers are proof that retailers must invest in digital solutions to get through the challenges of doing business in a pandemic, but this investment now will only be more valuable moving forward to distinguish brands in a saturated digital market.

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Braintrust
"The answer to this very much depends on what segment the retailer operates in."
"There is ample demand this holiday season and the best retailers have spaced it out over a longer period of time to support safer environments, delivery and inventory..."
"...retailers with the most flexible supply chains and omnichannel technology in place, have in fact made up for much (if not all) of the loss."

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