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Retail: 2011 holiday shopping season off to a strong start

In what could possibly viewed as a late in the year jump-start for the economy, the National Retail Federation (NRF) said that Thanksgiving and Black Friday holiday spending—in stores and on the Web—hit historic highs.
By Jeff Berman, Group News Editor
November 28, 2011

In what could possibly viewed as a late in the year jump-start for the economy, the National Retail Federation (NRF) said that Thanksgiving and Black Friday holiday spending—in stores and on the Web—hit historic highs.

In an NRF survey conducted by BIGresearch, there were myriad data points signaling that this year’s beginning to the holiday season was significantly improved compared to recent years, with some notable findings, including:
-total spending hitting $52.4 billion;
-226 million shoppers visited stores and Websites over Black Friday weekend compared to 212 million in 2010;
-the average holiday shopper spent $398.62 over the weekend compared to $365.34 last year; and
-shoppers spent an average of $150.53 online, accounting for 37.8 percent of their total weekend spending, among others.

NRF officials said that this strong performance serves as a promising sign for the economic recovery but noted that there are many shopping days left and that the early momentum needs to be maintained.

And similar sentiment was shared by NRF Vice President Ellen Davis on a media conference call over the weekend.

“Over the last few weeks, we have been noticing that it seems that American consumers have taken a deep breath in making the decision that it is OK to go shopping again,” she said. “And that is in spite of high unemployment and consumer uncertainty over the stock market and the housing market along with wavering confidence and jadedness over what is happening in Washington. Data we collected two weeks ago indicated Black Friday could be strong and after several recent Black Friday’s of ho-hum sales and a sense of anxiety and uncertainty on behalf of retailers, it is nice to be the bearer of good news this year.”

Jackie Fernandez, a partner in the retail practice at Deloitte, said that given the results of Black Friday weekend it is easy to understand why retailers were pleased with the results.

More spending, she said, was due to stores being open longer, coupled with the huge amount of promotions retailers offered consumers, which in a sense created a shopping frenzy.

“It provided even more reason for shoppers to get out there and see what the retailers had to offer,” said Fernandez. “It looks like consumers liked what they saw based on the numbers. We would expect that to continue throughout the rest of the holiday season.”

A main reason for as to why the shopping will continue, according to the findings of a Deloitte survey released prior to Thanksgiving, was that shoppers intend to continue shopping through the end of the month.

What’s more, this also bodes well for carriers and 3PLs, because with carriers having a good Black Friday weekend, there is a need for retailers to replenish merchandise and to keep consumers returning to their stores and maintain the same spending levels throughout the holiday season.

“Retailers need fresh merchandise, while consumers want to see fresh promotions,” said Fernandez. “This means more inventory will be pushed out to retailers’ stores by logistics partners. And much of the replenishment is likely to occur at the end of the holiday shopping season, due to purchases made with gift cards.”

In the Deloitte survey, 39 percent of its roughly 1,000 participants said they are likely to make their purchases later in the holiday season because they anticipate better promotions, and 22 percent said they are likely purchase earlier in the holiday season, because they are concerned merchandise may run out.

On the surface, this speaks to how retailers in recent years—early 2009, especially—were stuck with extra stock and were forced to unload it at heavily discounted prices. Consumers are still cognizant of this and may be playing a bit of a waiting game to see what types of deals are out there as the weeks go by. And retailers do not want to be in that same situation again and are being cautiously conservative with their inventory planning processes.

“It seems like retailers have learned their lessons on that front and because of technology retailers have become very astute in knowing what product is moving, what time of day it is moving, and how much of a markdown is needed to move a product,” said Fernandez. “Technology has really helped retailers in determining how much consumers buy, as well as the sell-through and analyzing what promotions move product faster than others.”

While Black Friday is off to a good start, a Washington Post report pointed out that in the third quarter consumer spending grew at an annual rate of 2.3 percent in the third quarter for its best quarter of 2011, while the national savings rate dropped—an indication that some consumers used their savings to spend on retail items.

About the Author

image
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff joined the Supply Chain Group in 2005 and leads online and print news operations for these publications. In 2009, Jeff led Logistics Management to the Silver Medal of Folio’s Eddie Awards in the Best B2B Transportation/Travel Website category. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. If you want to contact Jeff with a news tip or idea,
please send an e-mail to .(JavaScript must be enabled to view this email address).


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