With millions of Americans still paying off credit card debt from last year’s holiday spending, retailers and the Federal Reserve are hoping that Black Friday and Cyber Monday will help an otherwise struggling economy.
Taking credit for the term Cyber Monday, the National Retail Federation (NRF) discovered a trend of online shopping the Monday after Thanksgiving. Since 2005, it has become part of the pre-Christmas retail vernacular, and according to most studies has surpassed Black Friday in terms of popularity.
According to the online retail-tracking firm ComScore, Cyber Monday 2010 was the largest online retail day with more than $1 billion in online sales. It was the first time in history that online sales surpassed this benchmark. In comparison, foot traffic on Black Friday generated some $650 million.
Internet shopping is expected to be even bigger this holiday season. Industry tracker eMarketer estimates online holiday sales will grow 16.8%, compared with a year earlier, to $46.7 billion. Online sales make up about 8% of total domestic retail sales, according to Forrester Research.
“All of my Christmas shopping is done online and most retailers have the same specials online as they have in the store,” said Rebecca Springfield of Norfolk, Virginia, on Facebook. “I certainly don’t need the headache or hassle of standing in line for hours waiting for a store to open at 4am!”
Forty-five percent of those surveyed indicated they would surf the Internet on Cyber Monday while 37 percent stood in line on Black Friday. This contrast marks a stark change in the way cost conscience shoppers are seeking deeper discounts in tough economic times.
As one of the biggest online shopping days of the year, many retailers’ will run promotions on Cyber Monday. Most are planning to offer coupons/percent off deals (45.0%) and more than one-third (37.5%) will have limited-time promotions. Additionally, three in 10 (30.0%) will offer free standard shipping with conditions and 15.0 percent will feature a free gift with their purchase. With fewer disposable dollars to spend, shoppers have become more savvy and cost conscience.
Retailers that have both an online and physical presence are expecting a double digit increase in sales this year as a result of Cyber Monday.
“We found more people are planning on doing Cyber Monday this year rather than Black Friday. That is a trend that’s actually been happening the last few years. People see it as easier, more convenient, they don’t need to go to the shops and they can do it from the convenience from their own computer,” said Debra Miller Arbesman, spokeswoman at Compete.
Holiday shoppers who find time is not on their side often shop online over their lunch hours at work or at the end of the business day. According to the survey, 58.4 percent of workers with Internet access, or 75.9 million people, will shop from their office this year.
Most favored on Black Friday were purchases for higher-priced electronic devices. Up from 2009, the average Black Friday shopper was expected to spend $435 while Cyber Monday shoppers are expected to spend $387.
According to an NRF survey, Internet promotion is becoming more commonplace.
The survey found 88 percent of retailers had a special promotion for Cyber Monday, up from 72 percent just two years ago. Forty-nine percent of retailers have a specific Cyber Monday promotion in mind, up seven percent from last year.
“Cyber Monday has become such a crucial component of the holiday season that many retailers – and shoppers – don’t remember the holidays without it. And just when we think that Cyber Monday can’t get any bigger, it does,” stated Joan Broughton, of Shop.org.
Kathy Grannis of the NRF said both pure play companies – stores without a physical presence like Amazon or Netflix – and traditional brick-and-mortar retailers have taken to Cyber Monday. However, she does not see a strong impact on Black Friday sales.
“Physical retailers on Black Friday are not competing with Cyber Monday. They are reaching a different kind of shopper. In recent years, retailers began to offer Black Friday online deals to attract shoppers who want to get in on the action and may not want to get to the stores,” Grannis said. “We haven’t seen anything that would correlate a drop off in Black Friday sales.”
In disagreement, Springfield states: “I’m happily shopping from my laptop and wouldn’t dare venture out to the stores.”
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