Brick-and-mortar retail’s struggle to keep pace with e-commerce will be evident this holiday shopping season, as Cyber Monday spending booms and Black Friday sales bust. This year, IBISWorld expects that growing consumer trust in e-commerce and lower levels of leisure time will boost Cyber Monday sales 10.8% to $3.8 billion. Meanwhile, time-strapped shoppers looking to avoid chaos and lines will steer clear of retail establishments on Black Friday, causing brick-and-mortar sales for the holiday to decline 4.5% to $9.4 billion.
Despite growing demand for Cyber Monday, brick-and-mortar Black Friday sales will still represent the lion’s share of spending between the two shopping holidays, with 71.1% of combined outlay. Consumers are expected to spend significantly more at physical stores than online, as they take advantage of door-buster prices and validate the time and energy put into the shopping trip; on average, Black Friday shoppers will spend $96.39 this year, while Cyber Monday participants will spend only $30.88. Nevertheless, the low-commitment and stress-free nature of browsing an e-tailer’s inventory will lead to more consumers participating in Cyber Monday than Black Friday, with 123.3 million and 97.3 million people shopping during each holiday, respectively.
Bucking Black Friday
Black Friday has fallen out of favor among consumers in recent years, with the number of holiday participants falling at an annualized rate of 3.5% over the five years to 2017. While this is primarily the result of more shoppers opting for the convenience and time savings offered by e-tailers, it is further perpetuated by a cultural interest in minimizing the strain on sales associates. As retailers have increasingly started their Black Friday sales early, moving them up to the evening of Thanksgiving, shoppers and employees have pushed back with boycotts and protests. Even some companies are beginning to reject the holiday by opting to keep their doors shut on Black Friday; most notably, sporting goods retailer REI recently announced that it will keep its stores closed on Black Friday for the third year in a row. Declining demand from consumers and slightly lower retailer participation in the holiday has caused brick-and-mortar Black Friday revenue to decline at an annualized rate of 7.9% over the five years to 2017.
Hefty holiday spending
Brick-and-mortar Black Friday and Cyber Monday spending are only expected to account for 1.9% of total holiday outlay this year, down from 2.8% in 2012. As brick-and-mortar retail has struggled with external competition from e-tailers, more stores have offered frequent promotions and steep discounts, which has somewhat lessened the appeal of traditional shopping days like Black Friday. Nevertheless, IBISWorld expects that overall holiday sales in November and December will increase a strong 3.9% to total $681.3 billion. An expected 2.2% increase in per capita disposable income in 2017 is anticipated to boost overall consumer spending and allow more shoppers to splurge on gifts for friends and family. Moreover, the US population is expected to grow 0.8% this year, bolstering the number of potential shoppers and contributing to overall holiday spending.
According to the National Retail Federation, supermarkets and grocery stores, warehouse clubs and supercenters, health stores and family clothing stores will be some of the top retailers to benefit from holiday shopping this year. Growth in holiday sales will help support overall annual revenue for all four of these industries, with the Health Stores industry and Warehouse Clubs and Supercenters industry set to benefit the most. According to IBISWorld estimates, strong holiday demand for operators in these two retail industries will boost their total revenue 2.5% and 1.9%, respectively, in 2017.