By Savyata Mishra and Siddharth Cavale
(Reuters) – Value-conscious holiday shoppers have opened their wallets for last-minute online discounts on clothing and packing supplies, which can be a boon to retailers that offer convenience options like free delivery and curbside pickup.
The popularity of Internet shopping has increased due to convenience, the same or lower prices than in stores, the availability of services such as “buy online, pick up in store (BOPIS)” and fast, free delivery, said Michael Schulman. marketing specialist at Running Point Capital Advisors.
“The reduced holiday season this year compared to last year, along with the tight squeeze between Thanksgiving and Christmas, has left less time to shop in stores and likely encouraged more mobile and computer browsing and shopping,” he said.
While there were plenty of deals, sellers seemed to be getting discouraged by the promotion. The target (NYSE: ) and Dollar Tree (NASDAQ: ) shares were up nearly 3% in midday trading, while Walmart (NYSE: ) was flat.
According to MasterCard's (NYSE: ) SpendingPulse report, online spending during the holiday shopping season from Nov. 1 to Dec. 24 grew by 6.7% over the previous year, compared to a 2.9% increase in store sales.
This contributed to an increase in total spending of 3.8% in 2023, surpassing the previous forecast increase of 3.2% and the increase of 3.1% in the same period last year.
Steve Sadove, Mastercard's senior adviser and former Saks CEO and chairman, told Reuters that spending increased despite higher prices due to factored inflation. showing “more power in the end.”
With just 27 days between Thanksgiving and Christmas — five fewer than last year — marketing executives couldn't be more excited heading into the holiday season.
They describe their customers as “selective,” “savvy” and “conservative,” as well as making “needs-based purchases.” As a result, many retailers are doubling down on cutting prices and offering promotions, Bernstein analysts said earlier this month.
Walmart said it would continue to cut prices in retrospect, while rival Target said it would increase its marketing intensity as shoppers were not engaged without promotions. Dollar General (NYSE: ) said it expects profits to be squeezed to increase in the fourth quarter, while Kroger (NYSE: ) and Five Below (NASDAQ: ) also said they need to cut prices to compete.
Walmart and Target have spent more on advertising to reach consumers on short videos on TikTok and streaming platforms such as Peacock and Hulu during the year, highlighting their membership programs that offer fast delivery and BOPIS.
It seems that some of these efforts worked.
Salesforce (NYSE: ) estimates that the number of BOPIS orders could double in the week before Christmas, making up nearly 40% of all online orders for retailers. And deliveries are strong, with FedEx (NYSE: ) forecasting stronger-than-expected holiday delivery volume last week.
THE REAL POWER OF CONSUMERS
Huntsville, Alabama resident Aireale Hobbs, 40, started Christmas shopping for pajama sets, Stanley drink bottles, and toys for her family online on Black Friday.
He said he chose to do most of his shopping online because of the convenience, more options and better deals.
“I found some items at Target that were discounted when I used the app,” said Hobbs, who works as a front desk clerk at a doctor's office.
Laptops and televisions with new technology, lower prices and growing acceptance of lab-grown diamonds, and sportswear also encouraged consumers to spend this holiday season, although promotions were at similar levels to last year, Sadove said.
“The increase was controlled. There was nothing serious and there were no surprise increases. What we saw was the real power of consumers,” said Sadove, adding that low unemployment and high wages were affecting people's finances.
Sales in the clothing, jewelry and electronics categories rose 3.6%, 4% and 3.7%, respectively last year, according to Mastercard. Internet sales, in particular, grew by 6.7%, compared to 0.2% in stores.