Heavy discounts and post-Black Friday lull create challenges for retailers

The 2016 holiday shopping season has been one for the record books as far as online sales are concerned, with Black Friday and Cyber Monday sales reaching new heights.

But according to The NPD Group, many retailers could struggle to make the entire holiday shopping season a successful one compared to 2015. The firm, which collects and analyzes sales from leading retailers that provide it with weekly point-of-sale data, says that the fifth week of the holiday shopping season “brought the customary post-Black Friday lull, along with deeper discounts and more abundant week-long deals than in the past.”

As NPD’s Chief Industry Analyst, Marshal Cohen, explained, “Bigger discounts mean deeper holes to climb out of to match last year’s sales numbers.”

The NPD Group says that total dollar sales were down 5% this year in fifth week of the holiday shopping season, which includes Cyber Monday. Only one merchandise category, athletic footwear, registered a gain compared to 2015, with dollar sales rising a modest 2%.

All told, total dollar sales are down 3% this year through the first five weeks of the season. That would seem to mirror data from the U.S. Commerce Department, which says retail sales disappointed in November.

The digital divide

The record-breaking Black Friday and Cyber Monday sales figures are evidence of the fact that more and more of consumer purchasing activity is taking place through digital channels. But it’s important to remember that despite the growing importance of their websites and mobile apps, many retailers still operate as multi-channel businesses, so the online sales figures only tell part of the holiday shopping story.

Put simply, online retail is accounting for more of the pie, but the pie isn’t really growing.

While it looks questionable as to whether retailers will be able to turn the 2016 holiday shopping season into a true success, as CNBC has noted, “six of the 10 busiest days still lie ahead” according to retail analytics firm ShopperTrak.

Some analysts predict that this year’s Super Saturday, the last Saturday before Christmas, has the potential to produce more sales than Black Friday, and with cold weather blanketing much of the country, it would not be surprising if many of those sales take place online instead of offline.

That might help online retail set yet another sales record this year, but even if it does, hefty discounting could still make it hard for retailers to catch up no matter where their sales take place.

 

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