11/29/2010
By Brian Sozzi, Research Analyst

At this point, Cyber Monday could be relegated to the scrap heap in terms of importance for retailers.  A marketing tactic in its present form, Cyber Monday is poised to step back in line to the weeks preceding Black Friday, Thanksgiving, and even Black Friday itself.  The reason?  I have a few:

1. Online promotions began in the first week of November for many retailers this year.
2. Retailers were out promoting web deals for Thanksgiving, and consumers responded.
3. Promotions are being carefully matched between online and stores.
4. Greater access to the internet via smartphones allows consumers to take advantage of seasonal deals earlier.

The strong online sales reported for Thanksgiving and Black Friday underscore my rationale (if more retailers decide to open stores earlier in 2011 than in 2010, Black Friday may be on its way to relic status in the years to come.  Shoppertrak data may show the initial signs of this happening).

Coremetrics
* Black Friday online sales up 16%.
* Average order size up 12% online on Black Friday.
* Online spending higher by 33% on Thanksgiving.
* Online jewelry sales up 17.6%.

ShopperTrak
* Black Friday store traffic up 2.2%.
* Sales up 0.3%.

National Retail Federation
* Black Friday weekend traffic up 8.7%.
* Average spent per person up 6.4%.

comScore
* U.S. retail online sales for first 26 days of November up 13% to $11.64 billion.
* Black Friday online sales increase of 9% to $648 million.
* Thanksgiving online sales increase of 28% to $407 million.

In doing a tour of retailer websites this morning, I am not seeing aggressive promotions.  As I noted in my Black Friday assessment, this is not the holiday seasons of 2008 and 2009.  While there are what amounts to doorbuster promotions online at the likes of Wal-Mart (WMT) and Target (TGT) on TVs, cameras, and videogame bundles, prices outside of those categories are not being marked down to fire sale levels.  This is in line to the strategy being employed by retailers this season in my view; attempts to be creative and targeted with promotions rather than swiping 40% off an entire purchase, all in the hopes of tapping into the stronger consumer demand and growing margins.  After all, retailers must make up for the free shipping being offered to consumers (they do this by offering less of a discount and making consumers spend more to utilize the promotion).

A Tour of Some of Companies in our Coverage Universe

* Wal-Mart (WMT): Promoting Cyber Week, going all out to utilize the name as it did with Black Friday.
* Abercrombie & Fitch (ANF): 25% off at Abercrombie & Fitch (when you spend $150) and Hollister (when you spend $125).  Again, not a strong upfront discount, and is slightly less promotional than Black Friday.
* American Eagle Outfitters (AEO): 20% off entire purchase.
* Gap/Banana Republic (GPS): A mere 10% off the entire purchase.

Brian Sozzi
Wall Street Strategies

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