Economists Say Cyber Monday Will Outpace Black Friday Spending
KPBS Midday Edition Segments / December 2, 2019
Economists say Cyber Monday will outpace Black Friday this year but it won't overshadow the importance of getting shoppers in stores.
Speaker 1: 00:00 Today, many of you may be doing some holiday shopping online rather than in stores for cyber Monday. In fact, consumer spending is expected to exceed that of black Friday signaling a big shift. And how we all shop here to talk more about it is Miro Kopech, SDSU marketing lecture, and cofounder of bottom line marketing. Mira, welcome. Thank you Jade. So how much are people expected to spend today compared with black Friday? Well, you know, if we really look at a Thanksgiving day and black Friday, there was actually $12 billion spent between those two days. Today we're expecting as a single day, $10 billion. Just a little shy of that, which is a record for any single online shopping day. So they're spending a lot. Wow. So how does that spending then impact the overall economy? Well, what we're seeing, you know, the, the fourth quarter is very important to retailers this year.
Speaker 1: 00:52 Um, over $800 billion or is expect to be sold during this window. It's all being driven by consumers. If we look back at the last several quarters in the economy, consumers, consumer spending is driven, uh, any economic growth, even though last quarter the, the growth was 2.1%. Uh, almost all of it was consumer oriented. Manufacturing is contracting services which represent 80% of the economy are slowing down. Uh, but consumers are still feeling confident. Uh, consumer confidence though it's declined the last couple of months is still relatively high. Unemployment is low and people have actual real wage increases in their pockets that they're translating into shopping. And today's one of those days because there, there have been real concerns of a recession looming. Um, does this spending indicate that we're okay? I think most economists, uh, at this point have, um, are a little less inclined to think there's going to be a full out recession.
Speaker 1: 01:50 There's going to be definitely a drop in overall GDP growth. Uh, but consumers again are, are driving this. So, so if consumers feel confident, then the economy's not going to decline. So unless there's external shocks. So last year, if we remember, uh, we were facing the government shutdown right about now. We had, uh, one of the worst stock market quarters in since 1931. So consumers were a little bit rattled. Last year's holiday shopping really didn't meet the expectations this year. So far as starting out with the bang. There was over almost $70 billion sold throughout the black Friday through Sunday. And that's a record. Um, and a 12, 12 billion of that was online. So impressive. So was record spending. I must ask, what are the smart buys for today? Huh? You know, I think, uh, some TV's are big accessories. Um, so, so consoles, so for PlayStation type of things, um, video games are huge.
Speaker 1: 02:48 That was one of the biggest sellers on black Friday for online shoppers. Apple accessories. This, uh, are our big today. Uh, iPods, seventh generation on, on several websites is down to hundred $30. AirPods are, are a big deal. A lot of retailers, especially target and Walmart who are trying to counter what Amazon is doing, are making them really attractive. And of course, apparel is a big, is a big seller. During the holidays it's probably close to the number one seller. And then gift cards are the discounts deeper today more so than they were for black Friday in stores? Um, it depends on the item. What retailers are doing on, uh, for cyber Monday is they have the flexibility to do more door Buster specials every hour, every 30 minutes. They're conditioning shoppers to come during specific times. So if you're, you have your wishlist on, on their, on their retail site, they're giving you that alert that that item is on special.
Speaker 1: 03:41 But if you want to do a little treasure hunting, um, you know, every hour on the hour, especially on an Amazon or some of the bigger retailer sites like target and Walmart, they're always putting out something new. They can't do that as effectively on black Friday. They'll have, you know, new new items on, in the morning, new items in the afternoon. But online it's every hour, every 15 minutes on top of everything else. You know. How does technology work with this? Like the type of of cell phone you have? Uh, does that impact what price you see when you go online to shop? Um, a lot of eCommerce retailers were using this concept called dynamic pricing several years ago where, um, the pricing would be generated based on your geography operating system, your, whether you were using a mobile device or your computer. Uh, but in mobile devices, what retailers have found is that iOS, Apple devices, consumers who have an Apple device, when they buy, they tend to buy a lot more per purchase.
Speaker 1: 04:38 Uh, they tend to buy things that are not on sale. So what retailers will be able to do is saying, if you have an Apple device on general, you probably get less generous discounts then if you have a different device. Although consumers are becoming much more savvy and they're shopping around beforehand, um, they, they weren't as aware and, uh, and so, uh, probably Apple phone owners, uh, paid a little bit more if they bought on their device. Wow. Uh, so how will productivity at work be impacted today's everyone else searches for those doorbuster sales? Well, what's fascinating is that, um, say five years ago, people were on, uh, you know, at work on cyber Monday and they would shop online on their work computer. So employers knew how much time people were spending not doing work. Now that over 60% of all searches are through a mobile device and, and, uh, over 40% of purchases are on a mobile device.
Speaker 1: 05:32 It's a little harder to tell. Uh, although, um, you know, if, if, uh, employees are missing deadlines, uh, that's, that's probably a reason I'd be an indication. So this year we saw stores like JC Penney's, uh, open at 2:00 PM on Thanksgiving to get a jump on black Friday shopping. But with cyber Monday, proving once again to be the bigger spending day. Do you think retailers will adjust how they do business? Is black Friday going to go away? How do you think this is all going to be impacted? Well, what's, what's fascinating is that consumers really, you know, with all the attention on e-commerce shopping, e-commerce shopping this year will only be about 17% of all holiday sales. Those, the retailers really want people to come in store. And, and most retailers understand that in this window of time, it's almost a zero sum game. If I can't get you to come in the store, I want you to buy online and I need you to do it sooner rather than later.
Speaker 1: 06:25 Because consumers have a fixed amount that they have to spend. They kind of have budgets this year, consumers are going to spend about a little over a thousand dollars on gifts and holiday items. And so, um, there's a lot of pressure on consumers, uh, to spend more to give gifts to more people. Uh, but generally they'll, they'll hold the line somewhere. So retailers, you know, start early on on Thanksgiving, like JC penny at two o'clock. Most of the big retailers, Macy's, target, Walmart, we're five or six or including, uh, best buy and, and, um, again, even though on black, on Thanksgiving and black Friday, the, the amount of total online sales were $12 billion that represented 21% of sales. That's a little higher than normal. So this window of time is where the big bulk of online sales are gonna occur. It'll kind of flatten out and be in the two to $3 billion range on a daily basis where most people are going to go to the malls. I've been speaking with Miro Kopech, SDSU marketing lecture, and cofounder of bottom line marketing. Miro, thank you very much for joining us. It was a pleasure. Jade
Speaker 2: 07:35 [inaudible].