Highlights and Lowlights of Black Friday 2023
Black Friday 2023 witnessed a surge in mobile shopping, as consumers embraced the convenience of online purchases Meanwhile, a few analysts revised their season forecast, highlighting the dynamic nature of the retail landscape
Retailers have faced ongoing challenges this year due to inflation, leading to cautious consumers. In the lead-up to Black Friday, retailers have been urging consumers to spend, as it is traditionally the busiest and most crucial day for the industry.
"Customers are becoming more selective and discerning across the board, opting to make purchases closer to when they are needed," noted TD Cowen analysts led by Oliver Chen in an email about Black Friday.
Retailers, in response to consumer hesitation, began advertising their holiday shopping promotions earlier than usual, with several major companies rolling out their deals over a month before Black Friday.
According to data from Adobe Analytics, consumers spent a record $9.8 billion online on Black Friday, marking a 7.5% increase from last year.
Despite setting a new record for online spending, TD Cowen revised its guidance for the holiday season, now predicting a 2% to 3% increase in spending. This is down from their previous forecast of a 4% to 5% increase, while the National Retail Federation estimated that holiday spending would increase by 3% to 4% compared to the previous year.
As life returns to normal post-COVID-19, only a few incidents have occurred. Early on Friday morning, American Dream, one of the largest malls in the U.S., was evacuated due to a bomb threat. After a law enforcement investigation found no imminent threat, operations at the New Jersey mall returned to normal. The mall representatives did not immediately respond to Retail Dive's request for comment on the situation.
Some also opted to use Black Friday and prominent shopping spots as a platform to raise awareness about geopolitical issues. Demonstrators gathered at shopping centers in various major U.S. cities to voice their opposition to the Israel-Hamas War.
According to Michael Brown, Partner and Americas Retail Leader at Kearney, retailers who did not meet their performance or engagement goals are likely to have more opportunities for success before the holiday season concludes.
"Do not underestimate the consumer," cautioned Brown. "They have shown remarkable resilience and will continue to shop. They have a duty to their family and loved ones to fulfill their gift lists. If they're not shopping now, they will be soon — so be prepared, because they will come."
Now let's take a look at some of the key events that have taken place so far on one of the most crucial days of the year for the industry.
Winners
Mobile and online
Mobile shopping is projected to surpass desktop purchases for the first time during this holiday season, as revealed by Adobe Analytics. Over half of online spending (51.2%) is anticipated to occur on mobile devices.
In addition, Adobe Analytics reported that smartphones contributed to $5.3 billion of total online sales on Black Friday, marking a 10.4% increase from the previous year. Furthermore, smartphones represented 54% of online sales. This trend can be attributed to enhanced shopping experiences that have simplified the process of making purchases on mobile devices.
Following a decline during the pandemic, shoppers have significantly increased their mobile purchases, reaching a historic high in that category, as shown by data from Salesforce. In 2017, mobile accounted for 61% of digital traffic, which rose to 75% in 2020, and further increased to 79% this year.
Rob Garf, vice president and general manager of retail at Salesforce, stated in an interview with Retail Dive on Friday, "We see the mobile phone as the link that connects online and in-store shopping."
Garf noted that the tradition of rushing to stores at the crack of dawn for doorbuster deals is fading. Retailers are now replicating that sense of urgency by offering online doorbusters and early access to loyal customers. This shift has reduced the emphasis on physical stores during Black Friday. During Cyber Week, which spans from Thanksgiving to Cyber Monday, Adobe forecasts a 5.4% increase in online spending, totaling $37.2 billion and accounting for nearly 17% of the entire holiday season.
Thanksgiving Day recorded $5.6 billion in online spending, a 5.5% increase from the previous year according to Adobe. Black Friday saw a 7.5% rise from last year to $9.8 billion in online sales. Cyber Monday is expected to top the charts with a projected $12 billion in spending, a 6% increase year over year.
According to Salesforce, Black Friday’s online sales totaled $16.4 billion in the U.S. Discounts drove an 8% increase in global digital sales and a 9% increase in the U.S. The retail sectors with the highest online sales in the U.S. on Black Friday were general footwear and handbags (up 22%), sporting goods (up 21%), and health and beauty (up 17%).
According to data from Shopify, merchants on the platform have seen strong mobile performance, with 76% of sales coming from mobile and 24% from desktop. Additionally, Adobe found that, despite strong spending online and on mobile, consumers are opting for cheaper shipping options, with 80% of Black Friday online orders using standard shipping.
The last Saturday before Christmas, known as Super Saturday, will have an additional weekend shopping day due to the holiday falling on a Monday this year. This could potentially result in a significant weekend for retailers, as consumers who have delayed their shopping until the last minute will have two days off work to spend their money.
The impact of the calendar on sales will likely depend on the strength of discounts offered as the season winds down, according to Vivek Pandya, lead analyst with Adobe Digital Insights. Pandya explained in an interview with Retail Dive that consumers are taking advantage of the holiday shopping season to make purchases due to the perception of discounts, which may benefit them by giving the perception of having more time to shop online. This, in turn, may allow customers to consider different shipping options.
Pandya also highlighted a potential downside of promotions and discounts: when people see a good deal, they may be more likely to make additional purchases for themselves in addition to buying gifts for others, which can boost revenue.
This year's fiscal calendar also presents an extra opportunity for retailers. With 53 weeks instead of the usual 52 for accounting purposes, many retailers anticipate that the additional days will result in millions of dollars in added revenue for Q4 and full-year earnings reports starting early next year.
Bargain hunters
During 2020 and 2021, consumers had extra cash from stimulus payments and were able to spend rapidly and generously, according to Pandya. As a result, this dampened the excitement for Thanksgiving, Black Friday, and Cyber Monday.
“We call it discount chicken, where it’s always a game between the retailer and the consumer."
Rob Garf
Vice President and General Manager of Retail, Salesforce
Pandya stated that there has been renewed momentum and interest in shopping on Black Friday, Cyber Monday, and Thanksgiving, with consumers expecting the best deals to be offered on those days. Garf expressed a similar sentiment.
As the holiday season approaches, consumers have been especially diligent and patient in seeking the best value. This dynamic, referred to as "discount chicken," reflects the ongoing game between retailers and consumers, with the consumer often coming out ahead by waiting for the best and final deal. This pattern has been particularly pronounced in the current year.
Garf noted that retailers heavily promoted the start of the season but failed to offer attractive deals, which led to consumers waiting patiently due to economic challenges. However, after waiting patiently, consumers finally made their move over the weekend when they saw retailers finally providing more enticing offers.
Loser
Doorbuster decline
Experts have noted a decrease in the urgency and excitement surrounding the early morning doorbuster deals at big-box stores, which used to be a signature element of Black Friday. This shift indicates a change from the intense and frenzied atmosphere that was once associated with the day.
Michael Brown
During his visits to stores in the New York metro area on Friday, Kearney's Partner and Americas Retail Leader, Brown, noted that there was a significant amount of foot traffic, but it did not compare to the overwhelming crowds typically seen on Black Friday in previous years.
"We have the standard, appealing Black Friday prices, but what consumers may be anticipating is the next step. The ongoing negotiation between retailers and consumers in terms of shopping and spending, and we will soon find out who will give in first," stated Brown.
However, Garf emphasized that "the physical store is not obsolete. It plays a vital role in the digital shopping experience. Instead of having to rush to the store at 5 a.m., people can make purchases online and later pick them up at or near the store at their convenience."
