Online shopping rates lift total holiday sales [Part 1]

Retailers delivered what consumers wanted during the 2019 holiday season, and consumers rewarded them by opening their wallets, leading to total retail sales growth of 3.4% from the beginning of November up to Christmas Eve, according to Mastercard Spending Pulse. Online sales also rose to new heights as predicted by Mintel and Comperemedia, climbing 17% over 2018. In fact, such a high online shopping increase meant that most categories saw e-commerce gains, with apparel benefiting the most with online sales growth of 18.8%.

Here, we take a comprehensive look at how retail shopping shook out during the 2019 holiday season.

Consumers won the holidays

Online sales momentum also lifted some categories up enough that overall sales increases were achieved. Per Mastercard, total apparel sales were up 1%; jewelry up 1.8% and electronics up significantly at 4.6% (with ecommerce growth more than double that rate at 10.7%). Despite e-commerce growth of 6.9% for department stores, this wasn’t enough to ensure the sector saw black during the season as overall sales for the struggling channel declined 1.8%. In other words, department stores would have struggled even more had it not been for strong ecommerce performance. Mobile shopping drove ecommerce once again, with sales from smartphones comprising nearly $3 billion on Black Friday, or 39% of all ecommerce sales per Adobe.

Big Box retailers pushed omnichannel marketing strategies and convenience

The 2019 holiday season brought a pastiche of challenges for retailers due to the shortened shopping season and dwindling in-store foot traffic. Consumers relied on retailers that provided an easy and seamless shopping experience. As predicted in Comperemedia’s holiday season predictions, successful retailers faced these challenges head-on by pushing convenience and leveraging an omnichannel strategy. While big box retailers balanced highly-targeted paid Facebook campaigns with broad-reach video, winning brands diffused a message of convenience, product deals, and getting a head start on other deals for the fast-approaching holidays.

Retailers that delivered what consumers wanted

According to Mintel research on winter holiday shopping, two-thirds of consumers wanted to get all their shopping done as quickly as possible which speaks to their desire for convenience and speed. More than half of consumers wanted to spend the least amount of money as possible which embodies the bargain-hunting mindset. The most successful retailers were strong enablers throughout the shopping season, stepping up to deliver the elevated convenience and value in terms of pure dollars and cents that consumers wanted.

Walmart

Mass merchandisers, with their one-stop shopping convenience and affordable prices, continue to attract brand fans. Walmart, in particular, made big strides to bring consumers online and offline. Not only did the brand start deals in October, but to attract foot traffic for Black Friday deals (and to evade infamous Black Friday mayhem), Walmart offered coffee and snacks for consumers two hours before deals began. The strategy incorporated a giving spirit while providing early access to deals in a pleasant fashion. Additionally, Walmart leveraged its paid Facebook investments to tout new app features to support the consumer. The retailer promoted its app as a way for consumers to save time and money. As a result, Walmart topped Amazon as the most downloaded app surrounding Black Friday. On top of the app, its click-and-collect strategy motivated consumers to order online and pick-up in store which helped generate in-store foot traffic during Black Friday weekend. Walmart delivered on convenience and value by offering free next-day delivery on eligible orders over $35.

The convenience message did not stop after the Black Friday weekend. Throughout December, leading retailers catered to online shoppers by meeting delivery guarantees and offering options to pick up items in store while in-store shoppers could visit during extended hours and partake in branded experiences. Walmart also shined within this value proposition – its December 2019 grocery campaign empowered consumers to take on the stressful holidays through fast shipping and grocery expertise of Walmart employees.

Target

Target offered free standard or two-day shipping with no minimum purchase requirement. Target has also remodeled hundreds of stores to cater to either mission-oriented shoppers or casual browsers with separate entrances and has greatly improved its merchandise selection with a plethora of fashionable private label brands across categories that consumers actually like and want.

From an omnichannel perspective, Target’s emphasis on Cyber Monday helped the brand stand out. While many retailers focused on Black Friday, Target invested in display advertising to promote Cyber Monday ‘doorbusters’ that ran the Sunday before, which gave Target a head start on revenue for a highly competitive shopping day. The retailer also aggressively pushed products over brands. As consumers hunt for the best deals, all of Target’s holiday digital campaigns featured hot items and prices in order to incentivize customers. Like Walmart, Target also pushed convenience, running a paid Facebook campaign that focused on ‘easy entertaining.’

Despite these efforts, Target wasn’t satisfied with its holiday sales and aims to do better in upcoming quarters. Sales did rise 1.4% in November and December, but this is less than what the retailer expected due to soft performance in toys and electronics. Target now anticipates its fiscal Q1 sales will come in at less than half the 3-4% growth that was estimated.

Check out Part 2 tomorrow as we take an in-depth look at retailers such as Amazon, Kohl’s, Best Buy and Nordstrom.

Diana Smith is the Associate Director – Retail & Apparel at Mintel.

Lierin Ehmke is the Senior Digital Marketing Analyst at Comperemedia.