WASHINGTON, DC–Never before has the divide between online retail and brick-and-mortar retail sales been as stark as it has this holiday season. Adobe reported that more than $5 billion, or $5.27 billion to be exact, was spent online by the end of Black Friday, a 17.7% increase year-over-year.
In fact Black Friday sales surpassed the three-billion-dollar mark for the first time at $3.34 billion, for a 21.6% growth YoY, while Thanksgiving accounted for the remaining $1.93 billion. In another record first. Black Friday became the first day in retail history to drive over one billion dollars in mobile revenue at $1.2 billion, a 33% growth YoY.
“Shoppers hit the buy button at unprecedented levels as conversion rates were up nearly a full percent across all devices in the evening hours on Black Friday,” said Tamara Gaffney, principal analyst and director, Adobe Digital Insights in a prepared statement. “With the full day total coming in at $3.34 billion, Black Friday may have just dethroned Cyber Monday's position as the largest online shopping day of the year.
I will cut straight to the chase. Yes, these number are good news for online retailers and yes, some of these sales were likely cannibalized from a physical store. But the inevitable hand-wringing that will start, probably after Cyber Monday's sales are tallied up, over the fate of retail will be out of proportion to the problem.
The problem, to be clear, are the under-performing retail shopping centers — usually class B space that hasn't upgraded or modernized — and retailers that are struggling to remain relevant to their clients. The problem is not that online sales are taking away the 'rightful' market share of brick-and-mortar stores.
Omnichannel Retailing and Other Solutions
Retailers and retail owners such as Simon Property Group and Macerich, to name two retail REITs, have long ago internalized the need to embrace omnichannel retailing — that is, combining the various channels so they interact for the shopper.
They also have internalized the need for the retail center to be a destination, an experience for shoppers — not just a building that houses a variety of disparate stores — and routinely roll out tools and apps that position a mall as such a manner. Simon Property Group, to give one small example, rolled out a series of digital directories for some of its stores. These are 65″, LCD, full HD touchscreens and they come to life when a shopper walks within a few feet of the screen. The interactive maps shows the location of shops and services and display the fastest route for shoppers to take. There is also the usual plethora of marketing info on the latest offers and deals available from retailers and restaurants. It's a little touch — but a telling one that illustrates the new role a mall is expected to serve.
General Growth Properties, in another example, introduced a new app earlier this year that uses historical and real time data to let shoppers know which parking spots are available.
A bigger example is the unusual step Simon and General Growth Properties, along with a consortium of buyers, took in August when they successfully bid for the assets of Aeropostale. The teen retailer was bankrupt and instead of letting the stores close — many of them important anchors to these REITs' malls — they came up with a plan to keep open at least 229 of the stores open.
What To Do About the Dead Malls?
The big existential question is about the so-called dead malls, which are weighing down the industry.
An FTI Consulting report notes that 3% of all malls have vacancy rates over 40%. One in five malls have rates above 10%. These malls have tried a variety of tactics from trying to recruit non-traditional tenants to adapting existing space for church congregations and schools. But these strategies have had only limited success FTI said. It envisions a greater, more aggressive strategy.
It's one that holds promise for preserving short-term land value while capitalizing on long-term community and economic development trends—the redevelopment and creation of new mixed-use retail centers using existing infrastructure. These mash-ups typically feature stores, health centers, hospitality, office, and even housing—everything in one place to attract busy people looking for lifestyle convenience.
The Target Example
But back to this year's holiday shopping season. Online sales are here to stay and the smart retailer is making this trend work in its favor. Consider Target, which reported that millions of guests visited Target stores as well as Target.com. “We had a record-breaking day on Target.com and traffic to our stores was strong,” said Brian Cornell, chairman and CEO of Target, who greeted shoppers at the Jersey City Target store in New Jersey on Thanksgiving Day.
This year the retailer tried something new, letting its shoppers take advantage of pre-sale deals in stores via its savings app Cartwheel and then early on Thursday morning, letting shoppers access its Black Friday doorbuster deals on Target.com. The result — Target.com reported it had a record-breaking day, with traffic and sales eclipsing 2015 Cyber Monday, driven largely by doorbusters in electronics. Target also saw an increase in guests shopping via mobile, contributing to more than 60% of the retailer's online sales.
So no. The strong online sales do not mean the end is near for brick-and-mortar retail.
WASHINGTON, DC–Never before has the divide between online retail and brick-and-mortar retail sales been as stark as it has this holiday season. Adobe reported that more than $5 billion, or $5.27 billion to be exact, was spent online by the end of Black Friday, a 17.7% increase year-over-year.
In fact Black Friday sales surpassed the three-billion-dollar mark for the first time at $3.34 billion, for a 21.6% growth YoY, while Thanksgiving accounted for the remaining $1.93 billion. In another record first. Black Friday became the first day in retail history to drive over one billion dollars in mobile revenue at $1.2 billion, a 33% growth YoY.
“Shoppers hit the buy button at unprecedented levels as conversion rates were up nearly a full percent across all devices in the evening hours on Black Friday,” said Tamara Gaffney, principal analyst and director, Adobe Digital Insights in a prepared statement. “With the full day total coming in at $3.34 billion, Black Friday may have just dethroned Cyber Monday's position as the largest online shopping day of the year.
I will cut straight to the chase. Yes, these number are good news for online retailers and yes, some of these sales were likely cannibalized from a physical store. But the inevitable hand-wringing that will start, probably after Cyber Monday's sales are tallied up, over the fate of retail will be out of proportion to the problem.
The problem, to be clear, are the under-performing retail shopping centers — usually class B space that hasn't upgraded or modernized — and retailers that are struggling to remain relevant to their clients. The problem is not that online sales are taking away the 'rightful' market share of brick-and-mortar stores.
Omnichannel Retailing and Other Solutions
Retailers and retail owners such as
They also have internalized the need for the retail center to be a destination, an experience for shoppers — not just a building that houses a variety of disparate stores — and routinely roll out tools and apps that position a mall as such a manner.
A bigger example is the unusual step Simon and
What To Do About the Dead Malls?
The big existential question is about the so-called dead malls, which are weighing down the industry.
An
It's one that holds promise for preserving short-term land value while capitalizing on long-term community and economic development trends—the redevelopment and creation of new mixed-use retail centers using existing infrastructure. These mash-ups typically feature stores, health centers, hospitality, office, and even housing—everything in one place to attract busy people looking for lifestyle convenience.
The
But back to this year's holiday shopping season. Online sales are here to stay and the smart retailer is making this trend work in its favor. Consider
This year the retailer tried something new, letting its shoppers take advantage of pre-sale deals in stores via its savings app Cartwheel and then early on Thursday morning, letting shoppers access its Black Friday doorbuster deals on Target.com. The result — Target.com reported it had a record-breaking day, with traffic and sales eclipsing 2015 Cyber Monday, driven largely by doorbusters in electronics.
So no. The strong online sales do not mean the end is near for brick-and-mortar retail.
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