Final Holiday Update

January 11, 2016

Happy new year! We hope 2017 is off to a great start for you.

We shared with you the ups and downs throughout the holiday season. In short, ecommerce was strong, physical stores were weak, Amazon ruled the day, and promotional activity reached new levels. Across the board, the apparel category fared better than home, and emerging brands fared better than mature brands. Our year end industry reports coming out in late January will show more detail by category. Overall, and especially with the election, consumer holiday shopping narrowed to just a few weeks, starting just before Thanksgiving, and even after Thanksgiving there were slow days mid-week. Here are some of the highlights and stats that stood out to us.

Consumer spending continues to shift online:
44% of all Black Friday sales took place online (NRF) vs. 15% off-holiday.
Adobe reported that ecommerce sales increased 11% over LY (their information is based on analysis of 24.6B visits to shopping websites).
RetailNext reported mall traffic dropped 12.3% in November and December; however, the Thomson Reuters Same Store Sales Index registered a 1.8% gain for December.
Of the 70 percent of adults who visited a mall this season, a quarter said they did not shop at a store, according to ICSC. Nearly half reported dining at a restaurant.
Adobe reported that mobile devices accounted for 50% of visits to retailers’ websites, with a 23% increase in sales from these devices YOY.
Adobe also concluded that email marketing drove a fifth of all holiday online sales.

Amazon sets new records:
Amazon shipped more than 1B items worldwide this holiday season.
On the Monday before Christmas, 49.2% of all online sales in the U.S. were made on Amazon (Slice Intelligence). No other retailer came close. Best Buy had 3.9% and Target and Walmart were at 2.7% and 2.6% respectively.
Amazon shipped 50% more items for third party vendors (more than 28 million items from third party vendors just on Cyber Monday).
Amazon accounted for more than half of online product searches in December, with 52% of searches starting with Amazon compared to 26% with search engines, according to Google Search Trend data

Promotions reach new levels:
Of more than $6 billion in North American online retail transactions, Dynamic Action reported that retailers promoted much more heavily in 2016 than in 2015. Overall promotions were up 52% specifically within the holiday season.
The average apparel discount increased to 31.3% in December, according to the research firm Conlumino; however, they also reported that the amount of product on sale did not increase after December 26th, as it did last year when unseasonably warm weather left too much winter apparel on the rack.
Rakuten Marketing reported that average order value was down 5%; a downward trend in AOS is something we are seeing from many of you as a result of promotions.
A mid-December release from Retail Dive reported that the reliance on promotions had reduced product profit margins for North American retailers by 19% compared to last year, and driven up marketing costs by 7%, BUT with sales failing to drive new customer acquisition.

More interesting stats:
On average, 10% of items bought during the holidays are returned, with the large majority at stores (NRF).
2017 is expected to be stable but not spectacular, led primarily by ecommerce and international growth.
U.S. consumer confidence climbed to the highest level since 2001 in December.

After a year with highs and lows, we are hearing from many of you that your needs are two-fold: 1) the need to identify incremental, effective marketing channels and 2) the need to find meaningful ways to improve new customer acquisition. We hear you and we are ready to rise up to the challenge.

We wish you the very best in 2017, and we look forward to a great year together,
Polly & Your Friends at Belardi/Ostroy