Thanksgiving Day Sales Short of Adobe Forecast, but Online Sales Shatter Records

Black Friday weekend started out as much of 2020 has played out -- unpredictably, with Thanksgiving Day sales coming in at $5.1 billion, well below Adobe’s forecast of $6 billion (see 2011240039). “Heavy discounts and aggressive promotions starting in early November succeeded at getting consumers to open their wallets earlier,” said Taylor Schreiner, director-Adobe Digital Insights, in a Friday morning update.

Thanksgiving Day’s $5.1 billion in receipts marked a record high, up 21.5% year on year, Schreiner said, though “it didn’t come with the kind of aggressive growth rate we’ve seen with the start of the pandemic." The analyst cited the “unprecedented year in e-commerce,” due to COVID-19, the elections and “uncertainty around stimulus packages.” He said he thinks many consumers were holding off on remaining gift purchases until Black Friday and Cyber Monday “in hopes of scoring the best deals.”

Black Friday was seen setting a sales record as 51% of consumers expected to shop the day, said Adobe, despite 75% of consumers having already taken advantage of seasonal sales. Fifty-five percent of consumers reported that sales on the Black Friday weekend felt “less special” because of extended discounting windows, said Adobe. Some 56% believed retailers are saving the best discounts for Black Friday and Cyber Monday.

Despite shifts in spending and consumer behavior, Adobe expects Black Friday and Cyber Monday 2020 to be the two largest online sales days in history at $8.9 billion (20% year-on-year growth) and $10.6 billion (42% growth). The analytics firm reaffirmed its forecast of 33% growth to $189 billion for the full holiday season, Nov. 1-Dec. 31.

On Best Buy’s Q3 earnings call Tuesday, Chief Financial Officer Matt Bilunas tempered expectations for the holiday quarter, following a strong October (see 2011240025). Continued inventory constraints in computing and large appliances at Best Buy will result in less “promotionality” in Q4, Bilunas said.

The demand is there at a “very, very high level,” ProSource CEO Dave Workman told us. “In some cases, vendors are finding they don’t have to promote as much. If it was $1,000 off a TV, $500 is going to get it done,” he said of the higher end TVs the buying group’s dealer members sell. “You’re not dealing with an all-you-can-eat buffet,” which is “definitely good for profits,” said Workman. Though holiday sales are going on, “if you really know the details, you know that it’s just a little less here, a little less there.” Supply is the biggest challenge this holiday season, not demand, for ProSource retailers. Shortages cut across almost all categories, he said.

Though less aggressive promotions translate to higher margins, retailers are being hit by higher costs for hazard pay, wages, COVID-19-related procedures and transportation, Workman said: “Freight rates are way, way up.” Free delivery is “pretty much a standard. As long as Amazon does it, everybody else has to.” A lot of the online business is done in the third-party marketplace, he said.

Holiday season sales “may not appear as dramatic” this year, Tom Campbell, chief technologist-audio and video, at Los Angeles-area specialty retailer Video & Audio Center, told us Friday, because prices over the past year “are more affordable than ever.” Despite the falloff in store traffic during the pandemic, Video & Audio Center expected to see consistent traffic throughout the day. The retailer has seen strong demand from what consumers deem essential electronics -- computer monitors, outdoor TVs, home theater, sound bars and over-ear headphones.

At the mainstream level, TV prices hit historic lows in the first few weeks of November, Stephen Baker, NPD vice president-industry analysis, told us Friday. He cited “extraordinary products and pricing, especially from Walmart, with “pricing levels we haven’t seen before” on private-label TVs and models from companies including TCL and Hisense. “The tone was set a while ago around TV,” he said: “We’ve seen some record low price points so far.” This year’s deals extended to OLED TVs from Sony and LG, he noted.

In specialty audio, receivers were already in short supply after COVID-19-related supply chain issues dating back to Q1. They were exacerbated when a three-day fire destroyed chipmaker AKM’s factory in Nobeoka City, Japan, last month. AKM supplies ICs for audio, video and communications products and digital cameras, among other categories. “Everybody is scrambling to see how they’re going to diversify supply for these critical audio chips,” Workman told us: “I’m hearing about a lot product cancellations.”

Bjorn’s Audio Video, San Antonio, used Facebook Live events -- the retailer’s first -- to promote its Black Friday sales to 5,000 followers and others through targeted marketing. Black Friday offers would be available to viewers who mention seeing a special during the Facebook segment, but the items wouldn’t be tagged in the store. “It’s a special promotion that requires you have seen it; that’s going to be the hook,” said Neil Viers, marketing director and buyer. With most of Bjorn’s business coming from custom installation these days, “Black Friday is extra,” Viers told us.

In the first Facebook Live event Friday, Bjorn’s pushed OLED TVs from Sony, including the XBR77A9G for $3,299 and the XBR65A8H, at $1,799. Stereo receivers, Viers told customers during the event, “are hard to come by,” though the store had receivers starting at $479 in stock, he said. Viers, wearing a mask, urged Bjorn’s customers to do the same when they come to the store, assuring them Bjorn’s adheres to safety protocols and performs regular cleaning during the pandemic.

Bjorn’s has had Yamaha products on order since June that haven’t come in, including open orders on more than 60 stereo receivers, Viers said. Denon receivers are also in short supply, he said, quoting a distributor who said he had $1.5 million in backorders for audio receivers. “At $600 apiece, that’s a whole lot of receivers they can’t fill.”

A spokesperson for Yamaha emailed: “Our dealers are continuing to receive inventory as it arrives. The situation continues to improve from where the industry was this summer.” On the AKM chip impact, he said, "We continue to evaluate the situation and its potential impacts on our plans."

While discounts for TVs were “particularly strong” during Thanksgiving week, price drops of 16.7% through Thursday were expected to be topped by 19% discounts Friday, said Adobe. Amid widely reported supply constraints, computers were expected to reach 28% discounts over Black Friday weekend, it said. Toy discounts were seen falling by 30% by Sunday.

The most popular gifts on Thanksgiving were expected to be bestsellers on Black Friday, too, said Adobe, including Samsung and TCL 4K TVs, HP laptops, the Roku Streaming Stick+ and Apple Watches. An “interesting find,” it noted, was a 300% boost in sales for chess-related items, spurred by the Netflix series The Queen’s Gambit.

E-commerce giants with $1 billion in annual revenue saw a 233% increase in sales on Thanksgiving vs. the October daily average; smaller retailers saw a 154% gain. New shoppers embraced e-commerce, with 9% of all sales generated by net new online shoppers “as traditional brick-and-mortar shoppers moved online” in light of Thanksgiving store closures. Dec. 11 is the cutoff date for price-conscious shoppers, said Adobe, with shipping prices expected to jump by 14.6% on average after that date.

In states with COVID-19 restrictions around family gatherings, Adobe reported 3.4 times higher year-on-year growth in online shopping vs. states with fewer restrictions. Customers continued to show preference for omnichannel fulfillment options: Since Nov. 22, 56% of items purchased online were received via curbside pickup or expedited shipping, it said.