NewsWire: 12/05/2020
- Roughly half as many people shopped in stores on Black Friday compared to last year, while online spending jumped. The clear winners (again) were big-box stores like Amazon, Walmart, and Target, which allow for one-stop shopping and have the most robust e-commerce operations. (The Wall Street Journal)
- NH: Black Friday is traditionally one of the best days of the year for retail. But with the economy still coming out of recession, this year's Black Friday saw numbers wane. The number of total shoppers over the holiday weekend fell from 189.6m in 2019 to 186.4m in 2020. Total dollars per person, from $362 to $312. Thus, total spending was down by 15.2%.
- Driving more than all of this decline was plummeting foot traffic. In other words, rising Covid-19 cases and hospitalizations kept people home. NRF estimates that in-person shopping fell by 55% YoY on Thanksgiving day and 37% YoY on Black Friday. This was a big blow to independent businesses, which have always done most of their sales in person. Big-box stores suffered much less, not only because they sell a lot more online, but also because they enable consumers to satisfy all their shopping needs in one place. Placer.ai estimates that Black Friday foot traffic was down at Walmart by only 21.2% YoY and down at Target by only 26.9% YoY.
- Geographically, in-person Black Friday sales fell the least in the South (-42% YoY) and the most in the Northeast (-52% YoY). Red-zone communities are more likely to have kept their stores open during the pandemic, and red-zone customers are both more willing and more habituated to shopping in-person. Blue-zone communities, on the other hand, are more likely to be urban and less mobile due to Covid-related restrictions, and blue-zone customers are most used to buying online.
- Offsetting much of this bad news was a surge in total e-commerce. Online sales were up 22% YoY on Black Friday and up 15% YoY on Cyber Monday. (See first chart below.) Compared to last year, online sales increased on Thanksgiving day from $4.2b to $5.1b, on Black Friday from $7.4b to $9.0b, and on Cyber Monday from $9.4b to $10.8b.
- Big-box chains took full advantage of their growing online capabilities. (See second chart below and "Big-Box Retailers Reign Supreme.") Target, Walmart, and Best Buy did best of all. For the shopper who wanted to stay home, these chains offered the same deals online that they did in-store. Of all the chains, Target grew their online Black Friday sales the most, up 44% YoY. (Of course, this is growth from the smallest base.) Amazon unsurprisingly beat all of its competitors by a wide margin in total sales and announced that this holiday season has been its best in its 26-year history.
- While Black Friday still generated more total revenue than Cyber Monday, online transactions are invading the once in-person-only event. In 2019, one-third of Black Friday sales were online. In 2020, that share rose to half.
- Indeed, this may be the end of Black Friday as we know it. This year more shoppers than ever enjoyed the ease of online retail while getting the same deals that they could have gotten in physical stores. It’s hard for me to imagine that everybody will simply revert to in-person Black Friday shopping in 2021. Once again, that's good news for the scaled-up giants--but bad news for the mom-and-pops. (See "The Inexorable Triumph of Bigness.")
DID YOU KNOW?
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The Delicate Balance of Congress. Who controls the Senate won’t be clear until early January, when Georgia holds two runoff elections. But as of now, Republicans have a narrow edge, with 50 seats to the Democrats’ 48. Razor-thin majorities like this have become more common in the Senate and the House in recent decades, according to the Pew Research Center. In the 1960s, Democrats held nearly 70% of the seats in both chambers. By the 1990s and early 2000s, the balance was much closer to 50-50, making it far more likely that any given election could flip control of each chamber. Congress’s increasingly narrow partisan split has also made the tiebreaking power of the vice president that much more important: Mike Pence used his vote to break ties 13 times during the last session of Congress, far more than any other vice president. Prior to Pence, the highest number of tiebreaking votes in a single session was just three.
