AHEAD OF THE TAPE: The Limits of Black Friday and Cyber Monday
Black Friday and Cyber Monday offer up plenty of deals for consumers. For retailers, the shopping extravaganzas are a mixed bag.
Black Friday has long been the year’s biggest retail-sales day. And now, the following Monday is the ultimate online-shopping event. For the first time last year, Cyber Monday accounted for more online sales than any other day; that is likely to hold true this year as well, with U.S. online sales expected to increase 17% year-over-year to about $1.2 billion, estimates Andrew Lipsman of comScore.
Yet higher sales volumes can have a downside. Shoppers, after finding the item they want, often don’t make follow-up purchases. Plus, such sales might simply detract from quieter shopping periods in November and early December. In turn, retailers may compete so heavily that margins suffer. Rather than profits, Greg Melich of ISI Group says the days are aimed at “grabbing mindshare and traffic for the whole holiday season.”
Even worse, retailers are less likely to win long-term customers with holiday promotions. In the early days of Internet retail, some consumers had their first online-shopping experiences during the holidays, leading them to keep returning to a particular site in later months. Indeed, Mr. Lipsman says that after online sales spiked in November and December, sales in ensuing months would remain above preholiday levels. But that “step up” effect has lessened in the last few years, he says.