US Black Friday 2015 Preview - fbicgroup › sites › default › files › 2015... · 2 ! november 23, 2015 deborah!weinswig,!executive!director–head!of!global!retail!&!technology!

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November 23, 2015

DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved.

HOLIDAY 2015

2015 US PREVIEW BLACK FRIDAY

D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d o f G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9 C N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6

• Thanksgiving weekend no longer marks the true start of the holiday shopping season. Nearly 60% of shoppers surveyed by the National Retail Federation (NRF) said they started their holiday shopping by November 10 this year.

• There will be more Black Friday shoppers this year. The NRF estimates that 135.8 million shoppers are likely to shop during Thanksgiving weekend, up from 133.7 million in 2014.

• Cold and dry conditions in the West should drive year-‐over-‐year growth in both seasonal goods and foot traffic during Black Friday weekend. It will be dry in the East, too, but slightly warmer, which should support foot traffic but hamper seasonal demand in the region.

• Many retailers are becoming less competitive regarding store opening hours on Thanksgiving Day, as sales are now spread over the four-‐day weekend.

• An improving macro picture should support more spending over the holiday weekend.

• Online sales opportunities are critical for retailers, as consumers tend to shop online more during key holidays.

4 days to

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November 23, 2015


HOLIDAY 2015

2015 us black Friday preview

EXECUTIVE SUMMARY

• Thanksgiving weekend no longer marks the true start of the holiday shopping season. Nearly 60% of shoppers surveyed by the National Retail Federation (NRF) said they started their holiday shopping by November 10 this year.

• There will be more Black Friday shoppers this year. The NRF estimates that 135.8 million shoppers are likely to shop during Thanksgiving weekend, up from 133.7 million in 2014.

• Cold and dry conditions in the West should drive year-‐over-‐year growth in both seasonal goods and foot traffic during Black Friday weekend. It will be dry in the East, too, but slightly warmer, which should support foot traffic but hamper seasonal demand in the region.

• Many retailers are becoming less competitive regarding store opening hours on Thanksgiving Day, as sales are now spread over the four-‐day weekend.

• An improving macro picture should support more spending over the holiday weekend.

• Online sales opportunities are critical for retailers, as consumers tend to shop online more during key holidays.

1 35.8 MM H oli day sho ppe rs

KEY STATISTICS FOR BLACK FRIDAY 2014

• Sales during Thanksgiving weekend (Thanksgiving Day through Sunday) last year declined by 11.3% year over year, to $50.9 billion, from $57.4 billion in 2013.

• Average spend decreased to $380.95 from $407.02 in 2013.

• Including multiple shopping trips, an estimated 233.3 million people shopped during Thanksgiving weekend 2014, down 6.5% from 248.6 million in 2013.

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November 23, 2015


HOLIDAY 2015

Shoppers Enticed by Early Black Friday Promotions

According to the NRF’s recent consumer spending survey, a record number of 56.6% of holiday shoppers started shopping by early November this year. The figure is up from 54.4% last year and from 49% in 2008, when the survey first started including this metric. Due to this shift in holiday shopping patterns, single-‐day sales on Black Friday are becoming less indicative of retailers’ overall holiday sales performance. For example, while Black Friday weekend sales were down by 11.3% in 2014 year over year, overall retail spending in November last year was up by 5%.

This shift is not being driven solely by consumer behavior. Many retailers are enticing consumers to shop early instead of concentrating their holiday shopping activities on Black Friday. This year, a number of retailers released their Black Friday promotions earlier than last year, allowing consumers to plan their holiday shopping ahead of time. Walmart made its Black Friday playbook available two weeks earlier than it did last year, as did Lowe’s and Sears. A number of retailers are also launching Black Friday deals earlier this year. At Target, Black Friday deals start on Thanksgiving Day, whereas last year, they started at 1 am on Friday. Amazon has extended its Black Friday sales to two weeks, starting 12 days before Black Friday.

Figure 1. Selected Retailers: Black Friday Promotion Release Dates, 2015 vs. 2014

RETAILERS 2015 2014

Toys “R” Us Nov. 2 Nov. 13

Walmart Nov. 9 Nov. 21

Target Nov. 9 Nov. 10

Sears Nov. 9 Nov. 21

Macy’s Nov. 10 Nov. 12

Lowe’s Nov. 13 Nov. 23

Source: Company websites

Overall, the dominance of Black Friday single-‐day sales continues to wane as retailers spread their Black Friday promotions throughout the Thanksgiving weekend and emphasize deals throughout the entire month of November. As NRF President and CEO Matthew Shay put it, “Retailers have already given consumers several good reasons to start their holiday shopping earlier.”

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November 23, 2015


HOLIDAY 2015 Figure 2. Total US Consumer Retail Spending over Thanksgiving Weekend (USD Bil.)

Source: NRF

Figure 3. US Consumer Retail Spending: November 2014

Sales (USD Bil.)

YoY % Change

Total Retail Consumer Spending $399.9 4.9%

Spending Excluding Automobiles, Gasoline and Food Service $208.2 5.2%

Source: Department of Commerce

Colder Weather Supports More Traffic and Sales on Both Coasts

The weather outlook for next week, which includes Thanksgiving Day and the entire Black Friday weekend, shows that the US will see the coldest conditions across the West. The previous weekend’s cold conditions will linger in the East to begin the week, but temperatures will moderate back toward seasonal or warmer than normal beginning on Thanksgiving Day. Cold temperatures will filter back in by the close of the holiday weekend in the East. The warmest temperatures will be focused in the Deep South and Florida for much of the holiday weekend.

Despite mostly similar temperature readings on both coasts, buying behavior will differ by region. The cold and dry conditions in the West will drive the strongest opportunities for year-‐over-‐year growth in both seasonal goods and foot traffic. Although warmer temperatures across the East may alter what consumers choose to put in their baskets, dry conditions will support foot traffic.

Figure 5. Weather-‐Driven Demand vs. Normal Demand: November 22–28

Source: Planalytics

41.0 $41.2 45.0

$52.4 $59.1 $57.4

$50.9

2008 2009 2010 2011 2012 2013 2014

Figure 4. Thanksgiving/Black Friday Week Weather Outlook: November 22–28 Average Temperature vs. Normal

Source: Planalytics

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November 23, 2015


HOLIDAY 2015 For reference, the run-‐up to Thanksgiving Day last year was filled with rain, sleet and snow as a nor’easter moved across the Mid-‐Atlantic and Northeast regions. Thanksgiving Day 2014 was the warmest it had been since 2012, the wettest since 2010 and the snowiest since 1989. Black Friday was warmer than the prior year, although colder than normal, which drove purchases of cold weather categories.

Store Hours: Openings and Closings

The majority of stores that the FBIC Global Retail & Technology team follows will open on Thanksgiving Day this year at the same time they did in 2014; those opening times in 2014 had already been moved earlier, in many cases, than the previous year, reflecting the competitive promotions ahead of Black Friday. Many retailers seem to be becoming less competitive in terms of store hours, as more promotions are being spread over the four-‐day holiday weekend. There are some notable exceptions: JCPenney is opening its doors to shoppers at 3 pm on Thanksgiving Day, two hours earlier than last year and three hours earlier than in 2013, and Kmart is delaying its store opening hours by 13 hours.

Some retailers are even choosing to close stores altogether on Thanksgiving Day and Black Friday. This year, many big retailers, including Costco, Home Depot and Sam’s Club, will be closed on Thanksgiving Day, allowing employees to celebrate with their families. REI announced in October that its stores will be closed on Black Friday this year. The outdoor retailer is encouraging people to spend time outside instead of shopping, and to use the #OptOutside hashtag on Black Friday to share their activities on social media. “Black Friday is the perfect time to remind ourselves of the essential truth that life is richer, more connected and complete when you choose to spend it outside,” said REI CEO Jerry Stritzke.

Figure 6: Selected Retailers: Thanksgiving Day Store Opening Hours, 2015 vs. 2014

2015 2014 Best Buy 5 pm 5 pm Dick’s Sporting Goods 6 pm 5 pm Family Dollar 7 am 8 am JCPenney 3 pm 5 pm Kmart 7 pm 6 am Kohl’s 6 pm 6 pm Macy’s 6 pm 6 pm Old Navy 4 pm 4 pm Sears 6 pm 6 pm Target 6 pm 6 pm Tommy Hilfiger Closed 5 pm Toys “R” Us 5 pm 5 pm Victoria’s Secret 6 pm 6 pm Walgreens 8 am 8 am Walmart 6 pm 6 pm

Source: BlackFriday.com

JCP O pe n at 3p m o n Th anksgi vi n g d ay!

ReI closed o n b lack Fri day

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November 23, 2015


HOLIDAY 2015 Figure 7. Selected Retailers: Thanksgiving Day and Black Friday Store Openings/Closings, 2015

Thanksgiving Day Black Friday

Babies “R” Us Closed Open

BJ’s Closed Open

Cabela’s Closed Open

Costco Closed Open

GameStop Closed Open

Home Depot Closed Open

Jo-‐Ann Fabric and Craft Stores Closed Open

Lowe’s Closed Open

Nordstrom Closed Open

Petco Closed Open

REI Closed Closed

Sam’s Club Closed Open

Staples Closed Open

T.J.Maxx Closed Open

Tommy Hilfiger Closed Open

Tractor Supply Closed Open

True Value Closed Open

Source: Company websites

Macro Backdrop Improving Ahead of Black Friday

The macro picture continues to improve ahead of Black Friday. Gas prices are down by 27% from this time last year, which the Energy Information Administration suggests is adding an average of $700 additional income to American households. The most recent unemployment rate was a seven-‐year low and an improvement of 90 basis points over last year. Additional dollars in shoppers’ pockets might benefit different categories of Black Friday sales, as we see consumers increasingly spending more money on travel and dining experiences, big-‐ticket home items, and beauty products.

Figure 8: Macro Indicators

Indicator Month 2015 2014 YoY Change

Gas Price (USD/Gallon) October $2.40 $3.30 (27)%

Per-‐Capita Disposable Personal Income September $41,850 $40,704 2.8%

Savings Rate September 4.8% 4.6% 20 basis points

S&P/Case-‐Shiller 20-‐City Composite Home Price Index August 182.5 173.6 5.1%

Unemployment Rate November 5.0% 5.9% (90) basis points

University of Michigan Consumer Sentiment November 93.1 88.9 4.7%

Source: Haver Analytics

$700 e xtra per h o u se h old

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HOLIDAY 2015 A Very Digital and Purposeful Black Friday Weekend

Retailers have more opportunities to engage online shoppers during Black Friday weekend, as higher percentage of shopping happens online during that weekend than the rest of the year. In addition, Thanksgiving Day, Black Friday and Cyber Monday see higher new shopper conversion rates than the rest of holiday season, as consumers shop more purposefully during these key dates. In 2014, e-‐commerce penetration for the holiday season was 8% of sales, compared to 6.3% for the full year. Online sales during the five-‐day shopping period from Thanksgiving through Cyber Monday last year grew by 12.6% year over year, according to data from IBM Digital Analytics Benchmark.

Figure 9. New Visitor Conversion Rate (%): 2014

Source: IBM Commerce

APPENDIX: US HOLIDAY 2015 CALENDAR

November 2015 December 2015 Wk Mo Tu We Th Fr Sa Su

Wk Mo Tu We Th Fr Sa Su

44 1

49 1 2 3 4 5 6 45 2 3 4 5 6 7 8

50 7 8 9 10 11 12 13

46 9 10 11 12 13 14 15

51 14 15 16 17 18 19 20 47 16 17 18 19 20 21 22

52 21 22 23 24 25 26 27

48 23 24 25 26 27 28 29

53 28 29 30 31 49 30

Thanksgiving Black Friday Green Monday

Super Sat.

Cyber Monday Christmas Chanukah (Sundown to sundown)

Singles’ Day

Giving Tuesday

1.7

1.9

2.5

3.2

4.1

3.2

2.1

October

November 1-‐21

Thanksgiving

Black Friday

Cyber Monday

Green Monday

December 26

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November 23, 2015


HOLIDAY 2015

Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852.6119.1779 [email protected] Filippo Battaini [email protected]

Marie Driscoll, CFA [email protected]

John Harmon, CFA [email protected]

Aragorn Ho [email protected]

John Mercer [email protected]

Shoshana Pollack [email protected]

Kiril Popov [email protected]

Jing Wang [email protected]

Steven Winnick [email protected]

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US Black Friday 2015 Preview - fbicgroup › sites › default › files › 2015... · 2 ! november 23, 2015 deborah!weinswig,!executive!director–head!of!global!retail!&!technology!