Some thoughts ahead of this year’s Cyber Week (Thanksgiving through Cyber Monday):
Sales expectations are somewhat muted based on a welter of surveys and experts, as well as retail earnings last week, but Cyber Week is still kind of a big deal, extended season and early deals notwithstanding. There are, of course, no lack of consumer jitters due to nagging inflation, with study after study indicating some degree of hesitancy.
Dipping into just one example, a November survey of 1,000 consumers from UPS fulfillment arm Ware2Go, conducted by Dynata, found 61% have cut back ecommerce purchases in the second half of 2022, especially on electronics, clothing and home décor/furnishing. Also, 79% said their buying habits are changing in light of inflation and a potential recession, up 6% from Q3, and roughly a third said they’re buying cheaper gifts or fewer items than last year.
There was some hopeful news today ahead of Cyber Week, with better-than-expected earnings and holiday prospects from the likes of Best Buy, Nordstrom, Abercrombie & Fitch and Burlington Stores leading a retail rally on Wall Street.
If past is prologue at all in terms of store-based sales, prospects are better for retail on Black Friday, according to data from Placer.ai, which follows store traffic patterns across a number of major categories. The firm found that October foot traffic was 5.1% lower than last year, but higher than in 2019, indicating it’s less likely to hamper Black Friday visits. To back this up, recent studies from Goldman Sachs and Citigroup indicated a consumer preference toward store vs. online shopping this season, not a great prospect for carriers and delivery providers.
In terms of consumer sentiment across all retail, store and digital, the preference seems to be for shopping on Black Friday vs. other days, according to data from Jungle Scout, a provider of tools for Amazon sellers. The company polled 1,000 consumers and found 57% of them plan to shop on Black Friday, compared to 43% that preferred Cyber Monday. A fifth of respondents said they would shop the often-forgotten Small Business Saturday, while 18% said they would bypass the week altogether.
Adobe is calling for Cyber Monday to once again be the biggest ecommerce day of the season, at a projected record of $11.2 billion, up 5.1% from 2021. Black Friday, however, is only expect to increase 1% from last year, to $9 billion.
“These major shopping days are losing prominence as ecommerce becomes a more ubiquitous daily activity, and as consumers see discounts continuing throughout the full season,” Adobe opined. This is backed up by Adobe’s prediction that Cyber Week will represent a 16.3% share of the full season, down slightly from 16.6% in 2021. Total sales predicted for that period are pegged at $34.8 billion, up 2.8%.
Return policies continue to be a major factor affecting consumer sentiment and buying behavior as we round the quarter pole of the peak holiday season. In a September survey of 2,000 shoppers from PayPal unit Happy Returns conducted by Forsta, 86% of respondents said they check a retailer’s return policy before purchasing, and 87% consider free returns a major factor, even as more companies are walking this back due to high costs. Dropping off returns at a store or third-party location is preferred by 54% of consumers — ranking higher than carrier pickup even if free — and 79% said they’d rather avoid sending stuff back themselves.
On the highways, byways and delivery routes, some positive news came via a major FedEx contractor, running counter to many predictions of falling delivery volume this season, including the major banks cited above. Steven Johnson, president and CEO of Custom Delivery Services, an ISP with 120 routes in Mississippi and Louisiana, said while there has been softness the past three months, volume has been picking up nicely in November.
Johnson is a founding member of the recently announced ThinkISP, an analytics and lobbying concern that plans to share contractor data with FedEx in order to identify opportunities for mutually beneficial network improvements.
“Over the last three weeks, we’ve seen an increase, a sizable spike in volume,” Johnson said. “We’re thinking there’s going to be decent amount of packages [during peak], similar to last year. While normally we see volume growing year over year, it will be about the same. The communication of soft volume will always be comprehended different ways.”