Surge in holiday online sales may bring February hangover

Bloomberg

The initial Black Friday results have reinforced that this US holiday shopping season will be one of the best in recent memory. But even in good times, there are concerns for retailers.
The takeaway from the past few days is that Americans are spending at unprecedented levels, and the overwhelming majority of that growth — if not all of it — is online. While brick-and-mortar chains can rightfully claim their stores help boost web sales by giving shoppers a chance to see products in person, the web sales are less profitable.
“Stores have been gaining more traction, but online is growing faster,” said Poonam Goyal, an analyst for Bloomberg Intelligence. “The higher shipping expenses are still going to be a bigger drag on margin.”
The shift online means chains have to spend more on already-elevated shipping costs, which will eat into profit margins, she said. On top of this, many retailers now offer free or reduced rates for mailing packages during November and December, which only exacerbates the hit to results.
The added complexity and reduced profitability is hanging over this holiday season that, while expected to be a blockbuster, is also seen as possibly the last standout Christmas of the current economic cycle.
Investors started souring on retail stocks earlier this month amid concern that the consumer-spending environment could be at the peak of the mountain and will soon be
followed by decline.
Americans spent $50.6 billion online this month through Sunday, a 20 percent increase from a year ago and spearheaded by a 24 percent surge to $6.2 billion on Black Friday, according to Adobe Analytics. Cyber Monday is expected to add another $7.9 billion — a 20 percent year-over-year gain for that day.
Overall, physical stores had a disappointing four-day period with visits down 6.6 percent, according to retail analytics firm RetailNext. But not all brick-and-mortar chains and categories are created equal. For example, sales of electronics and appliances rose 6.4 percent over the weekend, according to Customer Growth Partners.
The researcher reiterated its forecast for holiday sales overall to grow 5.1 percent to $701 billion.
Most retail stocks reacted positively, with the SPDR S&P Retail ETF rising 2 percent, more than the S&P 500 Index’s climb of 1.6 percent. GameStop Corp. and Victoria’s Secret owner L Brands led the way.
The extra expense of e-commerce comes on top of the industry’s traditional holiday challenge of balancing door-buster deals with profitability. So far, discounting levels appear to be similar to last year, according to Jefferies Financial Group, although price cuts were deeper for some categories such as toys.

Cyber Monday creates history at Amazon
Bloomberg

Amazon saw its biggest shopping day in history on Cyber Monday, with the most products ordered worldwide than any other day.
On five days starting with Thanksgiving and continuing through Cyber Monday customers purchased millions more products compared to the same period last year. Amazon customers ordered more than 18 million toys, 13 million fashion items on Black Friday and Cyber Monday combined.
Company says sales by small and medium-sized businesses worldwide grew more than 20 percent year over year on Black Friday. New Echo Dot Alexa device was the top selling product on Amazon globally, in any category, over the holiday weekend. Whole Foods Market broke its all-time record of turkeys sold during Thanksgiving season.