The reports are in, and as predicted, the shopping weekend after Thanksgiving was a big one for retailers.
Some 247 million US shoppers visited stores or shopped online over the Black Friday weekend – up from 226 million in 2011, according to the National Retail Federation. Total spending reached an estimated $59.1 billion. Additionally, shoppers spent about 40.7 percent of their money online, up from 38.7 percent in 2011.
The online spending spree continued into Cyber Monday, which analysts anticipated would be the biggest online shopping day ever. It delivered, with online spending jumping 17 percent to $1.98 billion, according to estimates from Adobe Digital Index. ComScore, which also tracks online spending figures, projected online spending would hit at least $1.5 billion; the firm will release its final numbers Wednesday.
So the holiday shopping season started off with a bang. But what does that mean? Does the strong start signal that shoppers are more willing to open their wallets and purses this year? Or have shoppers, lured by longer and earlier Black Friday and Cyber Monday sales, merely spent their holiday budget earlier than normal?
The answer is crucial for retailers, since holiday sales account for between 20 and 40 percent of total profits. If recent history is any guide, the outlook is not particularly positive. Sales on Black Friday, or even the entire long weekend, is too small of a sample size to gauge the entire holiday season.
What’s more, the economic research firm has detected a slightly negative relationship in looking at holiday sales dating back to 1992. "History suggests that strong sales on Black Friday tend to be followed by weak sales over the rest of the holidays and that weak sales on Black Friday tend to be followed by strong sales later on,” Capital Economics concluded in its report released earlier this month.
Mr. Dales says that this makes sense if most households have fixed spending limits. “Good Black Friday sales may then just mean that households have brought forward some of their holiday spending,” he says.
The same phenomenon may have occurred within the long Black Friday weekend as more stores opened earlier than ever on Thursday evening, pulling sales forward. "Data suggest sales got off to a strong start on Thanksgiving night and throughout much of Black Friday (after a morning lull) but softened on Saturday and Sunday," writes analyst Ken Perkins, founder of Swampscott, Mass.-based Retail Metrics, in an analysis. The bottom line: "decent but not great Black Friday weekend results.”
Dales and others note that holiday spending has a few obstacles to overcome this year. Consumer confidence was so-so in November, owing to increased worry and awareness about the possible “fiscal cliff” – which, if Congress doesn’t take steps to avoid it, would automatically push up taxes and reduce government spending. “If you know that your after-tax income will fall next year, perhaps by $2,000, you are likely to spend less now,” Dales explains.
Nevertheless, consumer confidence is being buoyed somewhat by an improving housing market, falling gas prices, and optimism about the job market, according to IHS Global Insight, an economic research firm in Lexington, Mass. “We expect holiday retail sales to rise 3.9% above last year, not as strong as the past couple of years, but a good showing,” IHS economists Chris G. Christopher, Jr., and Stephanie Karol write in an IHS release.
And the online sector is projected to grab an ever-larger piece of the holiday pie, jumping 17 percent from 2011. “The clicks are outpacing the bricks,” Christopher and Karol write.