Big boxes take a big bite of Cyber Monday
Chicago Tribune
November 28, 2006
BY SANDRA JONES
Traditional retailers are joining e-commerce sites to profit from surge in online shopping the Monday after Thanksgiving, when an estimated 61 million logged on for Internet deals
Once mainly the domain of upstart Internet retailers, Cyber Monday is now synonymous with something a little more traditional: deals, deals and more deals to keep consumers spending at established stores.
The term Cyber Monday, coined last year by a retail trade group, was originally intended to describe the surge in online shopping that now takes place the Monday after Thanksgiving.
In the past, that was the day people sat in front of their computer screens at work and shopped at Internet retailing sites, like Amazon.com and Overstock.com, when they got tired of tromping through the mall.
But on Monday, traditional retailers, such as Wal-Mart Stores Inc. and J.C. Penney used Cyber Monday as a major adjunct to their weekend promotional period, extending an already aggressive price-cutting atmosphere into the first week of the holiday shopping season.
At first glance, it appears that shoppers responded—in droves.
An estimated 61 million consumers shopped online Monday, on par with the crowds of shoppers that visited stores on Black Friday, the day after Thanksgiving that ranks among the busiest shopping days of the year.
The big numbers will likely have implications for other retailers going forward, as traditional stores continue to search for ways to grab market share on the Web.
By noon Monday, visits to online retail sites had already surpassed the 2005 Cyber Monday peak of 3.1 million visitors per minute, according to Akamai Technologies Inc., a Cambridge, Mass.-based firm that tracks e-commerce traffic.
Traffic got so heavy that by late Monday morning, a new Web site called CyberMonday.com stalled, as four times as many visitors as anticipated lined up to log onto the site. An extra computer server was added by the afternoon to manage the traffic.
"Retailers are using promotions to get people to log on and get shopping," said Helen Malani, chief shopping expert at Shopzilla, a Los Angeles-based online comparison shopping service. "It's almost like there's an extended Thanksgiving shopping weekend."
Indeed, so-called bricks and mortar retailers have generally gotten more Web savvy. They dominated the top 10 online sites for Thanksgiving Day as consumers looked to get a jump on Black Friday doorbuster deals, some of which were only offered online, according to Hitwise, a New York-based online competitive intelligence firm. Wal-Mart topped the list with an 18 percent share, followed by Best Buy at 8.8 percent and Amazon at 8.4 percent. Circuit City, Target, Sears, Toys "R" Us, Overstock.com, Kmart and J.C. Penney rounded out the top 10.
In addition, keeping track of the online deals got easier this year as Web sites devoted to Black Friday sales expanded to include Cyber Monday deals, such as GottaDeal.com and BFads.net. The National Retail Federation, the Washington D.C.-based group that came up with the term Cyber Monday, also runs the CyberMonday.com Web site, touting links to special discounts from 400 retailers, including 30 bargains good only for Monday.
ComScore forecasts Cyber Monday sales will rise 24 percent to $599 million, up from $484 million in 2005, on par with the 24 percent increase predicted for the entire online holiday shopping season to about $24 billion.
The firm predicts the busiest online shopping day will be either Monday Dec. 11 or Tuesday Dec. 12. Last year, the busiest day was Monday Dec. 12.
Linda Lomax planned to tap into Cyber Monday deals as soon as she got home from her job as director of marketing at One Step Ahead, a Lake Bluff-based educational toy company. She expects to do most of her shopping online this year to avoid the crowds at the mall.
"I've got two little kids and taking them shopping doesn't work," said Lomax. "I avoid stores like the plague [at the holidays.] You can get everything done online and a nice brown box arrives at your door."
Wal-Mart, CompUSA, Staples, Sports Authority, J.C. Penney, Best Buy, Danskin and JoAnn Fabrics were just a few of the traditional retailers offering Cyber Monday deals. The one-day offers ranged from free shipping with a $100 purchase at Macy's to $50-off coupons for home audio and GPS navigational systems at Circuit City.
Traditional bricks-and-mortar retailers are expected to account for 50 percent of online holiday sales this year, up from 40 percent last year, according to ComScore.
"It's bricks-and-mortar retailers [that] have really figured out the Internet and its importance to them," said Gian Fulgoni, chairman of ComScore Networks, a Chicago-based market research firm. "It's not just the pure-play Internet retailers that are promoting aggressively."
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Surge seen in online holiday shopping
Bloomberg News
December 12, 2006
U.S. consumers' Internet spending for the holidays rose 25 percent from a year earlier as more people turned to the Web and stepped up spending with the approach of the busiest selling days of the year.
Online sales for the 38 days through Dec. 8 increased to $15.6 billion, Reston, Va.-based research company ComScore Networks Inc. said in a statement Sunday. Internet spending is rising faster than ComScore's estimate of 24 percent growth for November and December as consumers buy video games and consumer electronics in the weeks leading to Christmas.
Sales over the Web rose more rapidly than those of traditional retailers as faster Internet connections made it easier to shop at home. The last two months of the year account for 24 percent of annual online sales, led by Amazon.com. The busiest day of the year may be this week, ComScore said.
"Shoppers are savvy and realize that in some cases they can be rewarded for waiting," Dan Popowics, an analyst with Cincinnati-based Fifth Third Asset Management, said last week. "The calendar needs to turn over a few more days before the season heats up a bit."
Amazon.com was followed by the Web sites of Dell and Yahoo.
Sales may approach $700 million one day this week, ComScore said. Last year, the biggest online consumer spending day was Dec. 12, with $556 million spent.
"Online consumer spending growth continues to beat expectations," ComScore Chairman Gian Fulgoni said in the statement. The number of people shopping on the Web increased 17 percent, and the average buyer spent 7 percent more this year, ComScore said.
On Dec. 4, U.S. consumers spent a one-day record $647 billion on retail Web sites, eclipsing the corresponding day a year earlier by 26 percent, ComScore said last week.
Internet spending from home climbed 30 percent in November, while buying from work increased 19 percent, ComScore said.
Total U.S. retail sales rose 4.8 percent in November, the least since June, after poor weather throughout the country discouraged shoppers from visiting stores, Chicago-based ShopperTrak RCT said last week.
"Sales growth remains steady, which speaks volumes to the resiliency of the consumer," said Bill Martin, co-founder of ShopperTrak. Retailers "should see more growth as the 2006 holiday season progresses."
While customer traffic in November declined 1.6 percent from 2005, consumers spent more money each visit, Martin said. For the week through Dec. 2, traffic dropped 5.2 percent compared with a year earlier.
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Holiday Charge; Debit, credit cards overtake cash, checks for holiday shopping
New Orleans City Business
December 18, 2006
BY FRITZ ESKER
The popular checkout question — Credit or debit? — is being answered by holiday shoppers.
Debit cards are the most popular form of payment by consumers for the second consecutive holiday shopping retail season, according to the 2006 Holiday Consumer Intentions and Actions Survey by the Washington, D.C.-based National Retail Federation.
The survey polled nearly 10,000 consumers and 39.1 percent said they prefer making holiday purchases with debit cards compared with 34.3 percent in 2005. Credit cards remain No. 2 at 30.5 percent, up from 28.1 percent last year.
Cash and checks ranked Nos. 3 and No. 4, respectively, at 24.3 percent and 6.2 percent.
The survey also shows plastic payment far outweighs the use of money or check at a combined 70 percent of holiday sales.
“Debit cards and credit cards will continue to cannibalize cash and check writing as forms of payment,” said Greg McBride, a senior financial analyst for Bankrate.com in North Palm Beach, Fla.
Kathy Grannis of the National Retail Federation said debit payments passed credit card users in 2004, which shows shoppers are focusing more on spending limits as opposed to charging their credit cards and facing payments later.
“Consumers are becoming much more debt conscious,” Grannis said. “We’re constantly reminded of what good credit can get you.”
Sales dominator
The National Retail Federation’s regional spending breakdown by region shows 42.2 percent of consumers in the South use debit cards and 26.6 percent use credit cards for a combined 68.8 percent use compared with just 31.2 percent cash or checks.
Ryan Bordenave, marketing manager for the Riverwalk Marketplace in New Orleans, said customers shopping at The Nutty Bavarian use debit and credit cards for 80 percent of their purchases. Debit purchasing use is 90 percent at Magic Masters and 97 percent at The Oakley Store.
Mel Grodsky, president of the Lakeside Shopping Center Merchants Association, said “stores love debit cards because the cost is better and it replaces a paper check, which may be fraudulent.
“With a credit card, anywhere from 1.5 percent to 4 percent of the purchase goes to the credit card company while debit cards have a flat rate per transaction usually 35 cents,” Grodsky said.
Grodsky said the interest factor is another reason debit cards are more popular. An overspending shopper owes more money the next month after bingeing because of interest. Missed payments can pile up and mar a shopper’s credit rating, he said.
Stephen Eulie, division head of the First National Credit Card Center, a subsidiary of First National Bank of Omaha, Neb., said the NRF survey reflects a continuing trend of “people using less in the way of cash and checks.”
Eulie said credit card purchases are expected to increase 7 percent to 9 percent over the 2006 holiday season.
“Over the last 20 years, there’s been a continuous increase of yearly sales with credit cards,” he said. “It’s the convenience of more merchants accepting these cards and the incentives of rewards programs.”
The reward programs involve bonuses companies typically offer consumers for using a credit card. A common example would be a credit card that allows its user to accumulate frequent flyer points with each purchase, he said.
Consumers charge it
Carolyn Elder, vice president and general manager of Saks Fifth Avenue at the Shops at Canal Place, said most purchases made at the store are via credit card because customers earn a store credit card involving bonus points for Saks purchases.
McBride said credit cards remain an attractive form of payment for cardholders who pay their balance every month and wish to wait a month for enough money to pay for their purchases.
Lakeside shopper Joan Baudry likes the purchase delay. “I’ve got 30 days to wait for the bill,” she said.
Lakeside shopper Ronnie Lightell prefers to debit.
“I don’t have to pay later. I don’t end up with a huge credit card bill at the end of the holidays,” he said.
Use of the paper check continues its decline. In 2004, 9.9 percent of consumers used checks, which dropped to 9.1 percent in 2005 and 6.2 percent in 2006.
“I have never in my life seen so few checks,” Grodsky said.
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