December 30, 2008
Economists are paying special attention to the numbers generated by this year's holiday shopping. The year-end spike in retail activity tends to act as a saving grace for many industries during languorous years. As the economy continues its global slide and job loss figures spiral ever upward, all eyes are on the shopping season figures to herald not only the general thinking among consumers, but where the economy is trending in 2009. The early returns do not inspire optimism.
Usually, holiday shopping figures are announced in late January or early February. These days, the earliest figures come from the internet, as data trackers compile near-instant results of what people are buying and how e-tailers are performing. Now that online shopping has become mainstream, e-commerce trends render in miniature those of the broader shopping population, and the data collected for online shoppers can be extrapolated to predict results for the season as a whole.
Paint it black
Black Friday, the day after Thanksgiving, is considered the first "official" day of the shopping season. It's usually the busiest day of the year for retailers, and has traditionally provided the numbers on which economists base their predictions. This year, online sales were flat, up just one per cent from last year, according to comScore, a compiler and distributor of Internet metrics. Given the state of the economy, that one per cent increase could be seen as good news, but for the entire month of November, online sales fell four per cent from 2007.
In addition to Black Friday, economists have lately started to look to Cyber Monday -- the first business day after Thanksgiving -- for guidance. Most online shopping happens during the workday, as that's when a majority of people are using computers, and Cyber Monday has emerged as the first big day of the season for online shopping. The news was good this year: comScore's data shows that online shopping sales spiked 15 per cent from the previous year. That one-day lift cut the season's overall online shopping deficit to two per cent from November's negative four per cent. As of December 19, the overall deficit versus 2007 was just one per cent.
Making every day count
The hidden bright spot lies in the average daily sales figures. This year's shopping season was five days shorter than last year's, due to a late Thanksgiving. A one per cent drop for the full season means that people were buying the same amount of stuff in a shorter time period, and so were actually spending more per day than they did last year.
This year's average of online sales per day through December 19 is up five per cent from 2007. Americans spent $643 million per day between Thanksgiving and December 19, according to comScore. Cyber Monday was the third highest shopping day at $846 million, following Monday, December 15, with $859 million and Tuesday, December 9, top ranked at $887 million.
The day after Christmas, Amazon.com announced that the most recent season had been its best ever. The company did not give dollar figures, but noted that on its busiest day, it received 6.3 million orders.
One reason online sales held their own this year might be that bad weather across the country in the weeks leading up to Christmas kept many people inside, getting their shopping done online in the comfort of their homes.
Not so much with the silver linings
After Christmas, reports began filtering in that this season was horrible for retailers, whose overall sales dropped by four per cent. According to MasterCard Advisors, many specialty items and apparel retailers experienced precipitous, double-digit drops in sales. A pre-Christmas report from Reuters anticipates that massive retail store closings and layoffs will occur in the first months of 2009.
Competition from the internet is hurting retailers badly. A decade ago, most of the $643 million average daily online sales would have taken place in stores. A report released before Thanksgiving from the American Research Group showed that 30 per cent of shoppers planned to use the internet to do at least some of their shopping this year. That's a significant drain away from retailers.
Interestingly, that 30 per cent figure for online shoppers is down from 2007 (36 per cent) and down significantly from 2006 (44 per cent). In general, of course, people are shopping less this year because of the poor economy, but that seems unrelated to the disproportionate drop in online sales figures for 2008. Personal experience offers two clues: online purchases tend to come with high shipping costs, and online vendors usually don't offer the deep price cuts that traditional retailers make in order to clear their shelves for the coming season's merchandise.
The American Research Group report indicated that weeks before Thanksgiving, shoppers were planning to spend much less this year than last year -- about half, in fact. When money is tight, shipping charges hurt worse than usual, and getting more for your money at a store sale makes standing in long lines seem worth the wait. There was a time when online shopping allowed buyers to avoid local sales taxes, but more and more, e-tailers are adding local sales taxes, erasing one of the incentives to shop online.
Those who are still shopping online, on the other hand, seem to be spending more than ever before, as the sales volume in dollars remained about the same as last year.
Bleak days ahead
Things are bad when "losing less ground than everyone thought you would" counts as a success story. Next year's online shopping spree could be even more constrained than this year's flat performance. Most economists, as well as President-elect Barack Obama and those closely associated with him, agree that things are going to get much worse before they get better. The good news, at least, is that during the dark days ahead, we'll have the internet to provide us with news and entertainment. Assuming we can pay the ISP bill.
Usually, holiday shopping figures are announced in late January or early February. These days, the earliest figures come from the internet, as data trackers compile near-instant results of what people are buying and how e-tailers are performing. Now that online shopping has become mainstream, e-commerce trends render in miniature those of the broader shopping population, and the data collected for online shoppers can be extrapolated to predict results for the season as a whole.
Paint it black
Black Friday, the day after Thanksgiving, is considered the first "official" day of the shopping season. It's usually the busiest day of the year for retailers, and has traditionally provided the numbers on which economists base their predictions. This year, online sales were flat, up just one per cent from last year, according to comScore, a compiler and distributor of Internet metrics. Given the state of the economy, that one per cent increase could be seen as good news, but for the entire month of November, online sales fell four per cent from 2007.
In addition to Black Friday, economists have lately started to look to Cyber Monday -- the first business day after Thanksgiving -- for guidance. Most online shopping happens during the workday, as that's when a majority of people are using computers, and Cyber Monday has emerged as the first big day of the season for online shopping. The news was good this year: comScore's data shows that online shopping sales spiked 15 per cent from the previous year. That one-day lift cut the season's overall online shopping deficit to two per cent from November's negative four per cent. As of December 19, the overall deficit versus 2007 was just one per cent.
Making every day count
The hidden bright spot lies in the average daily sales figures. This year's shopping season was five days shorter than last year's, due to a late Thanksgiving. A one per cent drop for the full season means that people were buying the same amount of stuff in a shorter time period, and so were actually spending more per day than they did last year.
This year's average of online sales per day through December 19 is up five per cent from 2007. Americans spent $643 million per day between Thanksgiving and December 19, according to comScore. Cyber Monday was the third highest shopping day at $846 million, following Monday, December 15, with $859 million and Tuesday, December 9, top ranked at $887 million.
The day after Christmas, Amazon.com announced that the most recent season had been its best ever. The company did not give dollar figures, but noted that on its busiest day, it received 6.3 million orders.
One reason online sales held their own this year might be that bad weather across the country in the weeks leading up to Christmas kept many people inside, getting their shopping done online in the comfort of their homes.
Not so much with the silver linings
After Christmas, reports began filtering in that this season was horrible for retailers, whose overall sales dropped by four per cent. According to MasterCard Advisors, many specialty items and apparel retailers experienced precipitous, double-digit drops in sales. A pre-Christmas report from Reuters anticipates that massive retail store closings and layoffs will occur in the first months of 2009.
Competition from the internet is hurting retailers badly. A decade ago, most of the $643 million average daily online sales would have taken place in stores. A report released before Thanksgiving from the American Research Group showed that 30 per cent of shoppers planned to use the internet to do at least some of their shopping this year. That's a significant drain away from retailers.
Interestingly, that 30 per cent figure for online shoppers is down from 2007 (36 per cent) and down significantly from 2006 (44 per cent). In general, of course, people are shopping less this year because of the poor economy, but that seems unrelated to the disproportionate drop in online sales figures for 2008. Personal experience offers two clues: online purchases tend to come with high shipping costs, and online vendors usually don't offer the deep price cuts that traditional retailers make in order to clear their shelves for the coming season's merchandise.
The American Research Group report indicated that weeks before Thanksgiving, shoppers were planning to spend much less this year than last year -- about half, in fact. When money is tight, shipping charges hurt worse than usual, and getting more for your money at a store sale makes standing in long lines seem worth the wait. There was a time when online shopping allowed buyers to avoid local sales taxes, but more and more, e-tailers are adding local sales taxes, erasing one of the incentives to shop online.
Those who are still shopping online, on the other hand, seem to be spending more than ever before, as the sales volume in dollars remained about the same as last year.
Bleak days ahead
Things are bad when "losing less ground than everyone thought you would" counts as a success story. Next year's online shopping spree could be even more constrained than this year's flat performance. Most economists, as well as President-elect Barack Obama and those closely associated with him, agree that things are going to get much worse before they get better. The good news, at least, is that during the dark days ahead, we'll have the internet to provide us with news and entertainment. Assuming we can pay the ISP bill.
