Omnichannel Shopping Boosts Holiday Sales
Black Friday isn’t what it used to be. Although 151 million consumers shopped in the Black Friday weekend, which was more than the National Retail Federation expected, overall sales were a little bit disappointing. But as Hans Klis reports, less foot traffic at the malls was offset by more online sales.
As the unofficial kickoff for the Christmas shopping season, the Black Friday weekend is often seen as the harbinger for the most important time of the year for retailers. This year saw another shift to greater online purchasing.
In the four-day weekend consumers spent only $50.9 billion, down 11 percent less from the prior year. This was to be expected. In the run up to the national shopping frenzy retailers including outdoor clothing and gear purveyor REI announced that they would buck the trend towards opening earlier on Thanksgiving Day night. REI was not only closed all of Thanksgiving Day, it kept the doors shut and gave employees a paid holiday on Black Friday.
Other major retailers including Gamestop and Staples chose to limit their opening hours to ease the holiday pressure on employees. On Thanksgiving and Black Friday sales at brick-and-mortar locations fell about a billion dollars, but online sales soared. According to ShopperTrak, digital purchases on those two days hit $4.5 billion; up more than 25 percent compared to 2014.
The consumer shift to online sales for the holiday season was underscored by the success of Cyber Monday. According to comScore online consumers spent $3.1 billion. That’s an annual increase of 21 percent.
While online shopping is gaining ground on brick-and-mortar purchases, Stephan Gans, chief strategy officer at the North American brand consultancy firm Interbrand, says it will not cannibalize all of the holiday consumer spend. “Americans crave connections,” Gans asserts, adding, “Traditions like Black Friday and standing in line for a bargain are precious--particularly in such an atomized society as the US”.
Gans says that online sales may grab a bigger slice of retail sales vis-a-vis physical outlets, but he maintains that digital sales will actually help grow the entire pie.
Retailers are realizing that they have to adjust their omnichannel strategy to benefit from increasing digital consumption, in different ways and with different goals.
On Black Friday, Walmart lured shoppers to their physical store with a one-hour guarantee: consumers who bought one of five items within the first hour of opening the store got the best deal. But if the items ran out within that time frame, shoppers could still get the items shipped to their store at a later date at the same price. Walmart also offered most of its special ‘doorbuster’ offers both online and offline. Best Buy went even further and didn’t differentiate deals at all across platforms.
Omnichannel strategies are changing, for example with increased visibility on Pinterest or Instagram and ways to order online from these platforms, but getting consumers in the store is of course still very much the aim of retailers; either by click-and-collect, ship-from-store services or digital kiosks that provide endless aisles.
The first type seems to have been in vogue this holiday season. According to Forrester Research some 42 percent of online shoppers have used click-and-collect services to get their holiday shopping done this past season. And the firm is expecting that number to increase in 2016.
The reason for that is simple. More retailers are setting up these services for consumers, explains Steve Goldberg, president of The Grayson Company. “People are spending more time online to decide what they buy, they make their conclusions sooner than ever before and make transactions in a combination of ways. There is an increasing opportunity for consumers to order and pick up products”.
Again, it’s all about providing this traditional in-store experience while shopping.
Sears is trying its best to do this. The retailer updated its app to drive mobile traffic into store visits, providing ways to order out-of-stock products that are shipped to your home but also e-coupons and arranging in-store pick-ups or exchangers of online bought products. According to a company statement, Sears saw mobile traffic increase by 46 percent in 2015. More than one-third of its online interactions with customers were enabled by mobile devices. "These are so much a part of our members' lives and they're not only researching and sharing, they're also buying”, Leena Munjal, senior vice president, Customer Experience & Integrated Retail, Sears Holdings writes in a company statement. “So it's more important than ever to have a robust, simple-to-use shopping app with features and services that no other major retailer offers”.
But this rush to compete with online traffic by adjusting omnichannel strategies caused problems this holiday season. “Some retailers have moved faster than their capabilities could handle”, Goldberg says. It’s telling that The Wall Street Journal described how Target workers in Jersey City were frantically filling online orders for shipment inside the store on Thanksgiving Day. All the while thousands of shoppers stood in line waiting for them to finish and open the doors.
Goldberg adds, “In one example – and I’m not naming the brand – a retailer had customers pick up products at the same counter that others use to return purchases. That’s not a good idea. Everybody’s waiting in a line that’s now twice the normal size.” Also some retailers are going about it the wrong way, he says, getting customers to pick up their online purchases in a special location on the parking lot. “That’s certainly convenient, but doesn’t get the customer in the store”.
According to a survey by JDA Software Group one in four shoppers were using click-and-collect services this holiday season. A whopping 40 percent of them experienced logistical problems with their orders. Data from JDA shows that those disgruntled consumers probably won’t be coming back to these retailers next holiday season.
Luckily, now that Super Saturday has passed, retailers have nearly ten months to prepare to get their omnichannel strategies, product allocations and customer service in order. Even though some analysts are calling 2015 the most omnichannel year ever, 2016 may be even better.