Retail and online holiday sales off to strong start

Cyber Monday
The Target web site is shown on a computer screen at a coffee shop in Providence, R.I. Monday, Nov. 28, 2011. By mid-afternoon on Cyber Monday - which was started in 2005 by a retail trade group to encourage Americans to shop online on the Monday after Thanksgiving - online sales were up by 15 percent from a year ago, according to data from IBM Benchmark.
AP Photo/Michael Dwyer

Holiday sales appeared to continue briskly as shoppers scoured the Web for bargains on what's known as Cyber Monday. The Thanksgiving weekend brought an unexpectedly strong start to the holiday shopping season.

Stores opened earlier than ever with the usual deep discounts, and online offers of free shipping helped millions of shoppers shrug off concerns about unemployment and a slow economy.

Retail sales jumped 16 percent over last year's tally to $52 billion, an industry trade group said.

"It's very encouraging. Matter of fact it was a record setting weekend for Black Friday weekend," said Brian Steinhoff, president of the Minnesota Retailers Association.

Grow the Future of Public Media

MPR News is supported by Members. Gifts from individuals power everything you find here. Make a gift of any amount today to become a Member!

Nice weather in Minnesota and across the much of the rest of the country no doubt helped bring out shoppers. It was relatively warm with little snowfall or rain.

It'll be a while before major retailers disclose how they did individually over the weekend. Retail analyst Matt Arnold with Edward Jones said the anecdotal evidence suggests both Target and Best Buy had good weekends.

"Best Buy always gets a really big surge just because of how hot consumer electronics are during Black Friday," Arnold said. "You look under the tree and either jewelry or consumer electronics are the highest price point items usually. So, that's going to be where people to try to get their deal."

Despite the weekend's robust retail sales, the National Retail Federation did not raise its forecast of a nearly 3 percent sales increase for the holiday season. That's down from last year's mark of about 5 percent.

A strong Black Friday doesn't guarantee a better holiday season. In 2008, Black Friday hit a sales record. But overall holiday sales dropped 4 percent, according to the NRF in a Bloomberg report.

The weekend's retail sales were likely pumped up by deals on big-screen televisions and other big-ticket items, Morningstar retail analyst R.J. Hottovy said. He said sales will surely cool in coming weeks.

"This year, a lot of retailers put all their chips on Black Friday," Hottovy said. "I do expect to see quite a bit of moderation over the coming weeks as a lot of people already have their shopping done or the deals aren't just nearly as compelling as they were for Black Friday."

Hottovy said this is shaping up as the best year ever for online retail sales.

"We saw more free shipping offers from online retailers than we ever have before," he said. "And at this point, you can really find just about anything online and find it cheaply. I think that's a powerful combination that's really speaking well to consumers this holiday season."

Online retail sales soared on Black Friday, rising about 25 percent over last year to $816 million.

Online retailers have ramped up their sales promotions, especially for Cyber Monday. Analysts expect online sales for the day will top $1 billion for the first time.

Andrew Lipsman is vice president of marketing and industry analysis for comScore, which tracks retailers' website traffic.

"The early activity we have seen certainly can be attributed to the heavy level of promotion," he said. "There's also just an ongoing shift toward the digital channel. And there are, of course, more devices. Mobile devices are starting to play an increasing role."

Online sales account for about five percent of overall retail sales. But online research also leads to lots of in-store sales for retailers.

comScore says the websites for both Target and Best Buy have seen double-digit traffic increases compared with last year.

Lipsman said both retailers are using Facebook and other social media to attract shoppers.

"They asked consumers to 'like' their brands in order to seek deals," he said. "And what that ended up doing was broadcasting those brands through social channels to a lot more people. So, I think that contributed to driving additional traffic this year."

About half the online shopping done Monday occurred at workplace computers, mostly during coffee and lunch breaks, Lipsman said.

Investors will start getting a more detailed reading of holiday sales results later this week, when Target and some other retailers issue monthly sales reports.