What Black Friday Tells Us About The Future Of Retail

Image for post
Image for post

The verdict is in.

Black Friday was a boon for online retail.

Nostalgia still drove consumers to physical stores to snag and brag about great deals and to get into the holiday swing of things that only nicely decorated malls — complete with holiday music, Santa Claus and the looming reality of a Christmas deadline — can deliver.

But this year, millions more took not to their cars to trek to the malls for those deals, but to their couches instead. Adobe’s analysis of 80 of the top 100 internet retailers found that consumers racked up two billion dollars in sales via their smartphones between Thanksgiving and the end of the day on Black Friday.

But in one way, Black Friday wasn’t much different for consumers than any other shopping day.

Most of them were out looking for a good deal and a convenient shopping experience, and using their mobile phones to help them with both.

Letting Their Fingers Do the Shopping

A study conducted in 2016 reported that consumers touch their phones 2,617 times a day — about once every 33 seconds.

At the time, that stat seemed amazing, even unbelievable.

It’s actually neither — but rather, a testament to how important mobile devices are to consumers in navigating their day-to-day lives. And it shows much of a catalyst they’ve become in blurring the online and offline worlds for consumers and the people and businesses they touch — now every 33 seconds.

Nowhere have we seen these devices have more of an impact than in how consumers shop and how they do — and will — pay for their purchases.

Our second annual study, in collaboration with Visa, tells the story of how quickly — and enthusiastically — consumers embrace new connected devices and use cases to contextualize their shopping and buying experiences.

That increasingly includes voice-activated devices, the use of which to enable purchases has accelerated dramatically over the last 12 months. Now, 28 percent of all U.S. consumers report owning a voice-activated device, 27 percent of whom used it to make a purchase in the seven days we tracked their purchasing behavior. The proliferation of devices and apps that enable voice purchasing will only shift more commerce in that direction.

For merchants, this portfolio of connected devices represents an unprecedented opportunity to capture and convert consumers into customers wherever they are, and whenever they happen to be in the mood to make a purchase.

In fact, Adobe reported that 49 percent of online traffic on Black Friday was generated by smartphones, and the devices were used to turn 30 percent of all online purchases into sales.

They are also a real-time disruptor of how consumers now use the physical stores to shop.

Which is, they don’t — at least not in the traditional sense of the word.

Find Before They Buy

In September of 2018, PYMNTS conducted a new study of 4,900 consumers to better understand their use of the mobile device in making purchases once completed exclusively in the physical store. We asked these consumers to describe the last purchase they made in a 24-hour period, staggering the study over a week-long period so we could capture responses across different days.

What we found is a reality that most retailers probably already know: Consumers making the decision to visit a store isn’t about the surprise and delight of what they might find when they get there.

In fact, it’s quite the opposite.

Today, visits to physical stores are about the consumers’ certainty — even before she arrives — that what she wants to buy is in stock and available for her to purchase and walk out holding in her hands.

The Physical Retail Death Spiral, Take Two

In 2014, I wrote a piece about the coming physical retail death spiral when reports about foot traffic at malls during the holiday season showed a marked downward trend. That reporting then wasn’t just about an aberrant slip for that particular holiday season, but one that had, at that time, been nose-diving for the three years prior.

We didn’t really need a team of data scientists poring over data to produce those results: All one had to do was visit the mall and observe how few people were shopping there.

At the time of that story, there were those who rationalized the decline in foot traffic as consumers being cautious about spending. Then only a few years out from under the financial crisis, consumers were using their phones and laptops more often to find good deals in an effort to watch their spending, they supposed.

The conventional wisdom at the time was that physical retail would remain a relevant — and dominant — part of the retail shopping mix. After all, they said, more than 95 percent of all sales still happened in a physical store.

Fast-forward four years to a booming economy in which consumers are shopping until they are dropping, feeling ever more confident about their incomes and earning prospects and filling their shopping baskets higher than ever before.

The Wall Street Journal reported yesterday that foot traffic in physical stores is down for the fifth straight year, but not quite as sharply as in years past — not just during holiday times, but all the time.

Yet this decline comes as the economy is strong and consumers are buying more than they have in years — but just not at the physical store in the way they once did.

Image for post
Image for post

For more than 83 percent of the consumers we studied, stores are no longer places of discovery, but where they go to fulfill the things they have used their smartphones to scout out first.

According to our study, only 16.5 percent of consumers in the U.S. now use the physical store exclusively to discover what they want to buy, a remarkable shift in the space of decade when that number was pretty darn close to 100 percent.

Stores have increasingly become places where consumers walk in knowing what they want to buy, and how much they will pay — or pick up what has already purchased and paid for online.

Only 79 percent of the weekday consumers we studied made a purchase in a physical store, including for food and groceries.

The physical retail ship is still sinking.

The 22 percent of consumers in our study who made a purchase online did so across a variety of retail segments, including clothing and accessories and, to a smaller extent, groceries and order-ahead at QSRs.

All of these results were for an otherwise run-of-the-mill week in the fall.

Nearly a quarter of online shoppers in our study made purchases in excess of $100. Nearly 59 percent of the consumers who are making purchases using smartphones are women. More than a third (36 percent) used debit cards to make those purchases, 28 percent used credit cards and 11 percent used PayPal.

Sixty-one percent of those consumers expressed their “extreme” satisfaction with purchases made that way.

The only channel to beat the mobile phone?

That would be the desktop computer, at 65 percent.

Shopping in the physical store ranked a distant third at 58 percent.

The physical retail ship is still sinking.

The New Retail Reality

Busy consumers now place a premium on the value of their time, and view mobile and other connected devices as efficient enablers of their purchases regardless of where they happen to be: at home, at the office, while commuting or even while out and socializing with friends.

Convenience is their calling card — and retail’s new reality.

That’s true for all types of purchases.

Sixty-one percent of consumers discovered the last item of clothing they purchased online. And 42 percent of those consumers ended up making that purchase online. Nearly fifty-two (51.5) percent discovered the last mass merchant product online, with 39 percent of those consumers making that purchase online. Those who fulfilled in the store did so after knowing what they wanted and where they needed to get it at the best price.

In fact, reports suggest that traffic in the physical stores was strong in the mornings when door-buster type deals were promoted but otherwise light the remainder of the day.

Deals drove foot traffic, making the pitter patter of those little retail feet don’t necessarily belong to profit-making customers, but rather those who want the certainty of a great deal and the product in their hands.

Smartphones have democratized access to perfect information about those deals and those sales, giving consumers their short list of stores where they can buy them at the best possible price.

That is, if getting that product immediately is an important priority.

Soon, logistics will democratize that, too, giving consumers the ability to take possession of those items the very same day, even further reducing their need to visit the physical store to get what they want to buy.

That’s why Black Friday is little more than a souped-up version of how consumers shop and buy things today. Consumers no longer have to go to the store to find great deals on the things they want to buy. And on Black Friday or any other day, they don’t have to get up early to snag a spot in line or fight for a parking spot at the mall to get those deals.

All they have to do is reach for their smartphones every 33 seconds to check for deal alerts and emails — and then click Buy.

CEO of Market Platform Dynamics & http://PYMNTS.com

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store