Written by Savyatha Mishra and Siddharth Kavale
(Reuters) – Price-conscious shoppers opened their wallets for last-minute online discounts on clothing and storage items, which could benefit retailers that have also offered convenient options like free delivery and curbside pickup.
Michael Schulman, an online shopping researcher, said online shopping has risen in popularity due to its convenience, similar or lower prices than in-store, and the availability of services such as “buy online, pick up in store (BOPIS)” and fast, free delivery. Retail expert at Running Point Capital Advisors.
“This year's shortened holiday season compared to last, with more tightness between Thanksgiving and Christmas, also left less time for in-store retail shopping and may have stimulated more phone and computer browsing and purchases,” he said.
While there were plenty of deals, retailers seemed to be disciplined with the promotions. goal Shares of Dollar Tree (NYSE:) and Dollar Tree (NASDAQ:) rose nearly 3% in afternoon trading, while Walmart (NYSE:) shares were flat.
According to a SpendingPulse report from Mastercard (NYSE:), online spending during the holiday shopping period from November 1 to December 24 rose 6.7% from a year ago, compared to a 2.9% increase in in-store sales.
This contributed to an increase in total spending by 3.8% during 2023, exceeding the previously expected increase of 3.2% and exceeding the increase of 3.1% during the same period last year.
Steve Sadoff, a senior adviser to Mastercard and former CEO and chairman of Saks, told Reuters that spending rose even when higher prices due to inflation were taken into account. He noted that the last five days of the holiday season accounted for 10% of total holiday spending. Shows “a lot of strength in the end.”
With just 27 days between Thanksgiving and Christmas — five fewer than last year — retail managers were less enthusiastic heading into the holiday season.
They described consumers as “selective”, “cautious”, “conservative” and making purchases “based on needs”. As a result, many retailers have redoubled their efforts to cut prices and offer promotions, Bernstein analysts said earlier this month.
Walmart said it will continue to lower prices through pullbacks, while rival Target said it will increase its promotional intensity because shoppers won't participate without promotions. Dollar General (NYSE:) said it expects earnings to come under pressure from increased promotions in the fourth quarter, while Kroger (NYSE:) and Five Below (NASDAQ:) also said they had to lower prices to be competitive.
Walmart and Target spent more on advertising to reach shoppers on the short-form video app TikTok and streaming platforms like Peacock and Hulu during the season, highlighting their membership programs that offer express delivery and BOPIS.
Some of these efforts appear to have succeeded.
Salesforce (NYSE:) estimated that the number of BOPIS orders could double over the weekend before Christmas, making up nearly 40% of all online orders for retailers. Deliveries are also strong, with FedEx (NYSE:) estimating stronger-than-expected holiday delivery volume last week.
True consumer power
Erilee Hobbs, 40, of Huntsville, Alabama, began her Christmas shopping for pajama sets, Stanley cups and toys for her family online on Black Friday.
She said she chooses to do most of her shopping online because of the convenience, more options and better deals.
“I got a few things from Target that were discounted when I used the app,” said Hobbs, who works as a front desk clerk at a doctor's office.
Laptops and televisions equipped with new technology, lower prices and growing acceptance of lab-grown diamonds and sportswear also encouraged shoppers this holiday season, even though promotions were at the same levels as last year, Sadoff said.
“The promotions were controlled. There was nothing more profound and there were no panic promotions. What we saw was some real consumer power,” Sadoff said, adding that low unemployment and high wages were crippling personal finances.
Sales in the apparel, jewelry and electronics categories rose 3.6%, 4% and 3.7%, respectively, compared to last year, according to Mastercard. Online clothing sales, in particular, rose 6.7%, compared to 0.2% in stores.
