Winners and losers of Black Friday 2020 - Retail Dive

Black Friday 2020 was always going to be different.

Masks, socially distanced lines, limited foot traffic in stores — Black Friday this year was different both structurally and visually.

This year, retailers collectively blew up the traditional start to the holiday shopping season. Instead of door-busting discounts, open doors on Thanksgiving and frenzied crowds, major players in the industry spread discounts throughout November and launched online sales events in October.

"From the data we're tracking, instead of just a Big Bang on Black Friday weekend, we're seeing what's becoming more of a Cyber Month," Andy Mantis, head of data insights for 1010data, told Retail Dive in an email. "It kicked off with Prime Day in October, and is continuing."

E-commerce has been surging all year with the COVID-19 pandemic, which continued into November and the days ahead of Thanksgiving. Black Friday itself became the No. 2 day of all-time for online sales, according to Adobe.

As COVID-19 cases hit alarming new highs, millions of customers opted to stay home and shop by computer or phone. Many others made their purchases online and had store employees bring them to their car outside the store, rather than wait in line inside.

"In the past, retailers might have been able to deal with consumers who were curious to see what might be on offer at the store," Greg Portell, lead partner in the consumer practice at Kearney, told Retail Dive in an email. "Now, every indication we've had is that consumers are going to be much more deliberate, intentional and purposeful."

He added: "In the past, Black Friday might have been an 8-10 hour celebration, where shoppers are going from store to store. Today, that's unlikely."

All of that is going to have an impact on sales that will take some time to understand. "I don't know that you can draw any firm conclusions," Charlie O'Shea, retail analyst with Moody's, said in an interview Friday. "I've seen various reports that holiday sales are going to be between X percent and Y percent. I don't know how you get there. I know people have to make estimates, and I respect them for trying, I just don't know how you can predict anything in this environment."

With all that in mind, here's a look at the major trends from Black Friday so far.

Winner: E-commerce

Digital sales have posted explosive growth throughout 2020 as pandemic-wary consumers avoid indoor spaces. Black Friday was no exception. Together with Cyber Monday, Adobe Analytics expects they will be the heaviest online sales days of the year.

Thanksgiving hit a new record for digital sales, with 21.5% year-over-year growth to $5.1 billion. Black Friday rocketed past that, with online sales hitting $9 billion, an increase of 21.6% from last year, according to Adobe.

Salesforce put the online spending figure for the U.S. at $12.8 billion, or growth of 23%, and estimated that consumers worldwide spent an "astounding" 116.6 million hours shopping on Black Friday. Adobe estimates that consumers in the U.S. spent $6.3 million per minute shopping online during the holiday.

Mobile once again played a starring role in online shopping. Of all holiday sales, mobile accounted for 46.5% on Thanksgiving and 40% on Black Friday, according to Adobe. Total spending via smartphone increased 25.3% to $3.6 billion on Black Friday, the analytics firm said.

Miraculously, there didn't appear to be any major reported retail website crashes on Black Friday.

Winner: Curbs

Curbside pickup of online purchases went from something of a retail footnote going into 2020 to a major force, again because of COVID-19 concerns. Click-and-collect services were popular, with 52% of shoppers saying they would use the services over the weekend, according to a survey conducted online on Black Friday by the International Council of Shopping Centers.

During Black Friday, in-store and curbside pickup increased 52% over last year, according to Adobe. Retailers that offered curbside services for Thanksgiving sales saw a 31% higher conversion rate of traffic to their sites. "We expect this to become even more pronounced as we approach Christmas, and free and less expensive shipping options continue to dwindle," Adobe said.

According to Salesforce, store chains that offered curbside, drive-through and in-store pickup options in the U.S. increased digital sales at a 26% higher rate versus retailers that didn't provide it during the first days of Cyber Week. On Black Friday, those retailers that offered curbside increased digital sales by 19% over those that didn't.

"The consumers that are trying it like it," O'Shea said. "Would people have tried it without the pandemic? You wouldn't see anywhere near the level of demand for it that you do now. But those that try it, like it, and that was predating the pandemic."

Winner: Target (and other large retailers)

Going into the Black Friday weekend, Target's online sales in the U.S. were up 156% year over year for the month of November through the 24th, according to Edison Trends. The retailer outpaced Walmart (which has a larger digital footprint, meaning it has less room to grow) as well as Etsy, Best Buy, Amazon and eBay. Walmart, No. 2 in growth according to Edison Trends, saw an increase of 120% for Nov. 1-24.

Online sales for Thanksgiving and Black Friday rose 403% for large retailers as a group against their October average, compared to a 349% increase for smaller retailers, according to Adobe. On social media, Amazon, Walmart, Target, Best Buy and GameStop were the most mentioned retailers, according to Salesforce.

"As we saw throughout 2020, retailers deemed critical with accelerated omnichannel capabilities outperformed. This trend will continue," Matthew Katz, managing partner with advising firm SSA & Company, told Retail Dive in an email.

Cowen analysts pointed to Walmart, Target and Costco as likely winners based on trends at those retailers going into the sales event. "Multi-category retailers are best positioned to outperform this holiday season as shoppers consolidate trips and look to maximize their limited physical store visits," Cowen analysts led by Oliver Chen said in a research note Friday.

"The overriding punch line is if you had the wherewithal and the foresight to embark on a Walmart-type strategy, Target-type strategy, Best Buy-type strategy, where you can leverage your stores and also develop a compelling online presence, you're obviously benefiting," O'Shea said. "And you're going to continue to benefit because those investments aren't just going to die."

Loser: Anyone waiting until the last minute to order gifts for delivery

The flipside to curbside is the logistical difficulty in getting products direct to consumers' doors amid the frenzy of online shopping and delivery for the holidays. Michael Brown, a partner in Kearney's consumer practice, said in an email that "neither the networks, nor shippers, nor retailers were going to be able to handle the additional online traffic this holiday season."

"The best strategy that has emerged for retailers is curbside pickup or buy online, pick up in-store," Brown added. "If consumers aren't shopping in stores, it's the least expensive way to get the goods into the consumer's hands. Other fulfillment services reduce retailers' profitability because of the high cost of shipping and then the potential for the product to be returned."

Retailers are expected to face severe strains from the gridlock created by the increases in online purchasing for the season. "Retailers that haven't been planning for 'shipageddon' will be in a tough position as they scramble to fulfill the onslaught of digital orders before the winter holidays," Rob Garf, vice president of strategy and insights for Salesforce, said in an emailed statement.

Analysts with Adobe anticipate Dec. 11 to be the last day for cheaper shipping, with shipping prices increasing after that by up to 14.6%.

And that could hurt last-minute shoppers. "The Saturday before Christmas is traditionally all store-based traffic," Portell said. "This year, you're not going to have that same capacity to shop. Which is why it's so important to retailers [to] get purchases done early enough. Logistics-wise, the ability to get the product over to people is critical."

And then there's the question of if retailers will have what consumers are looking for as Christmas approaches, not just because of supply chain stresses but also the difficulty for retailers in predicting product demand amid economic and pandemic uncertainty.

"I don't know that there's a retailer out there that can swear on a stack of Bibles that they're comfortable with their inventory position," O'Shea said. "There is no historical model that can prepare us for what we're going through right now."

Loser: Store traffic

Fewer than 20% of shoppers planned to shop in stores on Black Friday, according to Deborah Weinswig, CEO and founder of Coresight Research, based on her firm's survey data from Nov. 23. On social media, analysts, journalists and other observers posted pictures of empty malls and stores.

"It's different, it was going to be different," O'Shea said. "We're going to see less store traffic, regardless, the pandemic has accelerated the shift away from [stores]. The drop in volume had to happen because shopping patterns were already changing, the pandemic accelerated everything, and now with [COVID-19] surges people are concerned about being out."

But a decline of course doesn't mean there was zero foot traffic on Black Friday.

"The strip malls, the category specialists, the big box, they seem to be experiencing demand," Portell said. "The stores that offer deals or something that gets them out of the middle tier will do well. If a store had traditionally relied on people walking by, natural foot traffic, that's not going to be there this year."

Katz said, "Unseasonably warm weather may help outdoor centers, but consumers will browse online and pick up in store."

The declines in foot traffic could hurt small retailers the most. "Small Business Saturday is probably going to take the biggest hit this holiday season," Portell said. "We're seeing a lot of positivity about consumer demand, consumer spending up, retailers able to handle the extra demand. But Small Business Saturday runs the risk of being a bust for the small, local retailers."

Loser: Crowds

On Black Friday, the U.S. reported more than 200,000 new cases of COVID-19 and some 1,400 deaths, as total reported cases surpassed 13.1 million, according to The New York Times.

That is the backdrop against which online shopping has surged on what is traditionally a major brick-and-mortar shopping day. And retailers have been preparing by instituting procedures and shopping features to make their stores safer, which in surveys consumers have said is key to their holiday shopping preferences.

In states with restrictions around family gatherings, online shopping growth was 265% higher than in states with fewer restrictions, according to Adobe.

And yet, people are still shopping in person.

"With six feet of separation, the lines look longer than they actually are," Portell said. "Consumers have been participating in Black Friday, they're at the stores. But you're dealing with stores in some states that are 25 percent capacity. Even with a bit of consumer surge, you're going to have a line."

Portell added: "The question is, how fast can retailers move people through their stores. They don't want a whole lot of lingering around."

At a local Best Buy, O'Shea saw a line growing outside the door over the course of the morning, with customers spaced six feet apart. "And there are a lot of people standing outside their cars looking at their phones," O'Shea said. "And they had 20 pickup spaces for online orders. Inside the store, there was about 300 square feet for online orders, being staged for pickup."

All that extra space — between customers, in the parking lot, in the store for order pickup — is perhaps the emblematic image for Black Friday this year, as much as pictures of crowds symbolized the holiday in years past.

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