Reimagining Retail: What this year’s Thanksgiving holiday shopping period told us

On today's podcast episode, we discuss how folks viewed big ticket items over the Thanksgiving holiday shopping period, how in-store foot traffic shook out, and the impact of buy now, pay later (BNPL). Listen to the conversation with our Senior Analyst Sara Lebow as she hosts Senior Analyst Zak Stambor and Analyst Rachel Wolff.

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Episode Transcript:

Sara Lebow (00:00):

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Hello, listeners. Today is Wednesday, December 11th. Welcome to Behind the Numbers: Reimagining Retail, an eMarketer podcast Made Possible by LiveRamp. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sara Lebow. Today's episode topic is a Cyber Five recap. Before we get into that, let's meet our guests for the day. Joining us are two of our analysts. First up is Zak Stambor. Hey, Zak.

Zak Stambor (00:56):

Hey, Sara.

Sara Lebow (00:57):

Also, here with us is Rachel Wolff. Hey, Rachel.

Rachel Wolff (00:59):

Hey. Thanks for having me.

Sara Lebow (01:00):

Thanks for being here. Okay, let's start off with the basics of Cyber Five. What is your number one takeaway from the Cyber Week data? Rachel, why don't you go first?

Rachel Wolff (01:13):

Sure. So I think one thing that stood out to me is just that shoppers are spending more across the entire weekend, so it's not just about Black Friday or Cyber Monday, but people are spending on Thanksgiving on the weekend.

Sara Lebow (01:24):

Zak, what's your number one takeaway?

Zak Stambor (01:26):

So I have a couple-

Sara Lebow (01:28):

Okay.

Zak Stambor (01:28):

... so I'll cheat and have a couple.

Sara Lebow (01:28):

Great.

Zak Stambor (01:30):

One, e-commerce is doing very well. Consumers are largely going online and making their purchases, even. If they're venturing into the store, they're actually making a purchase online, so that's one thing. And then the other is that growth is pretty good. Growth exceeded a whole lot of forecasts. Our forecast was very much on target in terms of e-commerce sales across the Cyber Five and in particular we were just about on the dot for Black Friday and Thanksgiving, which is really solid growth.

Sara Lebow (02:05):

Yeah, and that's real growth, right? That's not just inflationary growth.

Zak Stambor (02:08):

Yeah, exactly. With inflation running at about 2.3-ish percent, I think we're at, this is actual volume. People are buying more stuff, which is notable and a difference from a few years ago.

Sara Lebow (02:22):

What is one number that stood out to you this Cyber Five?

Zak Stambor (02:26):

Yeah, the 8.2% year-over-year e-commerce growth across the Cyber Five from Adobe, that's pretty strong growth. It's right in line really with our forecast. We forecast 41.43 billion across the Cyber Five, and the Adobe number was 41.1 billion, so we were right on target.

Sara Lebow (02:47):

That's fascinating because our overall retail e-commerce sales growth for 2024 is 8.1%, so that puts... Did you say Black Friday or Cyber Week?

Zak Stambor (02:59):

Cyber Five.

Sara Lebow (03:00):

Cyber Five. That puts that right in line with what we consider overall retail e-commerce sales growth as well.

Zak Stambor (03:07):

Oh, that's really interesting.

Sara Lebow (03:08):

Rachel, what is one stat that stood out to you?

Rachel Wolff (03:11):

So one stat that stood out was MasterCard spending Pulse's Black Friday data, which showed that U.S. retail sales, excluding autos, rose 3.4% year-on-year. And breaking that down even further, for them, e-commerce went up 14.6%, so an even bigger jump than what Adobe saw. But in-store was only up 0.7%, which really illustrates how e-commerce has taken over Black Friday.

Sara Lebow (03:36):

That is a bit higher than our overall forecasted retail sales growth, which we have at 2.8% for the whole year, not just for Cyber Five for 2024. So yeah, clearly shows that people are spending even more on Black Friday compared with the rest of the year. Okay. You mentioned in-store. I did not go to stores on Black Friday or at all during Cyber Five. Did either of you?

Zak Stambor (04:03):

Oh, I did, and it was not pleasant.

Sara Lebow (04:06):

So how did in-store fare, not just in your personal experience but across the board?

Rachel Wolff (04:12):

It was pretty mixed. Overall, foot traffic was down about 2.3%, but there were some pretty big winners like Target, for example, which saw a 17% bump in store traffic on Black Friday, which I'm attributing to the Taylor Swift effect, given that they were the exclusive retailer for her Eras Tour book and the latest vinyl and CD edition of her latest album.

Sara Lebow (04:37):

Is that a 17% bump over a standard day or over Black Friday last year?

Rachel Wolff (04:42):

Over Black Friday last year, I believe.

Sara Lebow (04:44):

Gotcha. Okay. Props to Taylor Swift, who was embarrassingly, once again, my number one artist on Spotify this year.

Zak Stambor (04:51):

It's just a throwback. That approach is a throwback to the way things used to be, where retailers gave consumers an actual reason to venture into the store to make the purchase. Now you don't need to. You can just go online, which is why a lot of people just did that.

Sara Lebow (05:07):

One thing that you guys mentioned to me is that people were spending a lot on big ticket items. That seems like a surprise because the vibes, if that's a scientific measure, have been that money is kind of tight. So why are people spending so much on things like TVs?

Rachel Wolff (05:22):

I think it's just because they're waiting for precisely this moment to start spending on those things because they knew that that's when you're going to get the biggest discounts on TVs, on furniture, all of those big ticket items.

Zak Stambor (05:35):

Yeah, I think that's true, but I think there's another cause here, and that's the election. Since the election, the Trump tariffs have really broken through, and that's in mainstream media. There have been articles on CNN, on The Wall Street Journal and then Times all about how prices are going go up, but also on TikTok and a lot of influencers urging people to buy stuff now before the price goes up. So I think a lot of people are just who are in the market for, or thinking about perhaps buying a big ticket item like a TV are thinking, "I might as well do it now before the price goes up."

Sara Lebow (06:13):

Is this a retailer strategy? Are they saying, "Hey, buy now before the price goes up because of tariffs?" Is that a marketing approach?

Rachel Wolff (06:21):

I think some are leaning into that messaging, but I also think it's just true. It does seem like prices will go up if there are tariffs. We saw this last time around with washing machines. There were targeted tariffs on-

Sara Lebow (06:36):

Last time around meaning the last time we had this president.

Zak Stambor (06:39):

Correct. Yeah. So there were targeted tariffs on washing machines. The price of washing machines went up and so did the price of dryers, even though there were no tariffs on dryers. And so people are recognizing that the prices will go up. They were hit hard when we saw prices go up a couple of years ago and they don't want to be stuck again having to pay a lot, and they figured they might as well just bite the bullet now.

Sara Lebow (07:05):

Do you think consumers have a long-term enough memory to recall that tariffs had that effect?

Zak Stambor (07:11):

I just think this message has broken through in a way that I think surprising given that there's so much going on at the moment. But inflation has been so jarring over the past few years, and consumers are just weary of having to pay a lot extra or more than they're accustomed to.

Rachel Wolff (07:32):

And I think it might also be the way that it's framed. A lot of people are talking about how tariffs will cause inflation to spike again, and so I think when you frame it in that way, people are just more aware of it.

Sara Lebow (07:44):

Man, imagine if it had been framed in that way. Just kidding.

Zak Stambor (07:48):

There was that, though. During the election, Kamala Harris constantly spoke about a 20%, how did you phrase it? Sales tax. There was going to be a tax of 20% on stuff, and I don't know, people just didn't fully believe it until he got elected again.

Rachel Wolff (08:11):

It wasn't on TikTok then.

Zak Stambor (08:11):

Yeah, right. Yeah, until [inaudible 00:08:13].

Sara Lebow (08:13):

It wasn't Brat enough.

Zak Stambor (08:14):

Yeah. I don't know.

Sara Lebow (08:15):

What else stood out to each of you this Black Friday and Cyber Five in general that we have not mentioned yet?

Zak Stambor (08:24):

I think this is the first year of GenAI really having an effect on retail.

Sara Lebow (08:32):

What do you mean by that?

Zak Stambor (08:33):

So Salesforce had a number out there that it's like roughly one out of every $5 spent online was influenced by GenAI, which can mean a whole lot of different things. It can be a chatbot. It can be an AI-powered tool. It can be a whole lot of things, but it seems to be working. Retailers offered generative AI or AI-powered agents had a 2% higher conversion rate than those that didn't.

Sara Lebow (09:04):

And so is that just that those retailers are Amazon or [inaudible 00:09:08]

Zak Stambor (09:09):

Right. I do think there's a little nuance there that I'm glad you're calling out because the retailers that have it are bigger retailers that probably would have a higher conversion rate than other ones. But still I think it's not nothing. And so I think we're seeing whether consumers recognize or not that they're using generative AI-powered tools that it's helping them shop.

Sara Lebow (09:30):

And when you say whether or not they recognize it, you could search for something on Google, Amazon, I don't know, and not realize that you're getting GenAI-powered results necessarily, but it's still leading you to that conversion. That's probably the smoothest way that GenAI shopping can take place.

Zak Stambor (09:46):

I think it makes more sense that way. Yeah, I think it's right because why create a friction point when one doesn't need to exist? You can just put the technology into place and get people accustomed to it in a sly manner.

Sara Lebow (10:02):

Okay. Aside from GenAI, what else stood out to you?

Rachel Wolff (10:05):

We also had pretty strong BNPL usage, so it was at an all-time high on Cyber Monday, nearly a billion dollars spent using BNPL. So that's notable. It's a sign that shoppers are turning to these alternative methods to just manage their budgets better.

Sara Lebow (10:21):

Do you know what share that billion is of Cyber Five sales or Cyber Monday sales?

Rachel Wolff (10:26):

I don't know what share it is a Cyber Monday, but the share of overall spending this holiday season is expected to be 7.7%-

Sara Lebow (10:34):

Okay.

Rachel Wolff (10:35):

... per Adobe.

Sara Lebow (10:35):

So a sizable share of that went to buy now-

Rachel Wolff (10:36):

A sizeable share-

Sara Lebow (10:38):

... pay later.

Rachel Wolff (10:39):

... right.

Sara Lebow (10:39):

And what do you make of that in terms of retail implications?

Rachel Wolff (10:43):

Well, I think, again, it just shows that people are being more careful about how they spend. They're looking to these alternative payment methods to spread out their spending a little more. But what's also interesting is that BNPL growth was actually less than Cyber Monday growth. So people are just basically saving to spend on Cyber Monday and Black Friday and on these sales.

Zak Stambor (11:05):

I don't know if I would characterize it as being careful. I think it's they're stretching their budget and they're looking for any means of doing so. If it's BNPL, great. If it's a credit card, great. They just want to spend.

Sara Lebow (11:16):

We've talked about this the last three years ever since the word Klarna entered our vocabulary.

Zak Stambor (11:22):

Right.

Sara Lebow (11:22):

Due to BNPL, will there be a January hangover where you're still spending those hundred bucks every week on things you bought a month ago? Will consumers spend less in January because they spent on BNPL in December?

Zak Stambor (11:38):

I think it's similar to the way in which there's often a hangover effect in January. Whether it's BNPL, whether you get your credit card bill or just you saved up a bunch and you spent cash, people generally just pull back in January and don't spend as much.

Sara Lebow (11:57):

Yeah, this is what we talked about last week related to using New Year's Eve resolutions or New Year's resolutions as a way to get folks to spend, it's that people are pulling back. So what is the angle to spend? Okay. Well, that is all we have time for today, so thank you so much for being here, Zak.

Zak Stambor (12:15):

Well, thanks for having me.

Sara Lebow (12:16):

Thank you, Rachel.

Rachel Wolff (12:18):

Thank you.

Sara Lebow (12:18):

Thank you to our listeners and to Victoria who edits the podcast and deserves a cyber high five. We'll be back next Wednesday with another episode of Reimagining Retail, an eMarketer podcast made possible by LiveRamp. And tomorrow, join Marcus for another episode of the Behind the Numbers Daily.