The dust has settled. The results tallied. Black Friday, CyberMonday, and the entire weekend these two days bookend proved to be a strong thrust for holiday shopping. Here are 5 trends that materialized over the weekend. Some of these trends are continuations of story lines we’ve followed in past years that have grown and expanded in 2017. Many of these will be further amplified in 2018.

#1 It’s not the day. It’s the week. It’s the month.

In past years retailers attempted to pull holiday sales forward and best competitors by offering ever earlier holiday promotions. In September 2013 Kmart aired the first holiday commercial of the season 105 days before Christmas. On the same day some school districts on the east coast were welcoming students back for the start of a new school year, Kmart was dropping their first holiday commercial. Retailers have since learned through trial and error that aggressive early promotion doesn’t net the desired results, and as Kmart experienced can produce backlash from shoppers. In more recent years, most retailers have started holiday promotions on November 1st. Coinciding with this, consumers are settling into when they start and complete their holiday shopping and few are starting before November 1st.

At the same time Black Friday continues to spread beyond the confines of the single day following Thanksgiving in the United States. This year Amazon launched its Black Friday store on November 1st. Target offered online Black Friday deals for its credit card holders on November 22, two days before Black Friday. Macy’s offered Black Friday pricing on select deals the week before Black Friday and other retailers offered Black Friday pricing the entire week of Thanksgiving. In addition to retailers opening on the evening of Thanksgiving, most begin offering the entirety of their Black Friday deals online starting just after midnight on Wednesday evening. Likewise, CyberMonday is expanding beyond the Monday following Thanksgiving. As in year’s past, Kohl’s, Amazon, and others are promoting CyberWeek – extending CyberMonday into the entire week.

While retailers are using November 1st as the official start of holiday promotions, they continue to find ways to expand Black Friday and CyberMonday promotions to encompass the entire week and even sprinkle Black Friday promotions and deals strategically earlier in the month of November. Look for this trend to continue in 2018. The key take-away for retailers is clear: shoppers are settling into holiday shopping patterns. In order to succeed, retailers must capture consumer attention during the periods when consumers are focused on shopping.

#2 Online Dominated the week, with mobile driving much of the growth.

CyberMonday has become the Belle of the ball as Black Friday has becomes increasingly pulled across the entire week and online shopping has grown to dominate overall sales for the week. According to the National Retail Federation (NRF), some 174 million Americans shopped over the weekend. Of that total, 58 million of them exclusively made online purchases, while 51 million only shopped in-store. Over 64 million people bought both online and in person. Also telling, while some 66 million shopped on Black Friday, 81 million shopped on Monday. What was previously an afterthought at the close of the weekend is now driving 15 million more shoppers. According to Adobe, CyberMonday was the biggest online sales day in history. More than $6.59 billion was sold, an increase of 16.8 percent year-over-year. Likewise, Amazon reported CyberMonday was their biggest day in history, surpassing Amazon Prime Day earlier this year.

Mobile driving traffic and sales

According to Shopify, mobile sales outpaced desktop sales for the third consecutive year. Mobile sales accounted for 64 percent of overall online sales, a 10 percent increase. Mobile sales on CyberMonday grew 11 percent and now represent 60 percent of overall online sales. Commerce marketing firm Criteo reported 40 percent of Black Friday online purchases were mobile, compared to 29 percent last year.  According to Adobe, mobile devices accounted for between 46 and 54 percent of all site visits and between 30 and 37 percent of all sales. Similarly, IBM reported 34 percent of online sales this weekend were coming from mobile devices and 54 percent of all online traffic was driven by mobile devices.

App use will be the mobile battlefield in 2018

Amazon reported purchases made via their mobile app were up 50 percent on Thanksgiving day compared to last year and they reported seeing similar growth on CyberMonday. App use is shaping up to be the next big battlefield. I’ve pointed out that retailers can’t grow sales significantly by pulling sales forward. They’ve already found the sweet spot for when to open physical stores and when to start online sales. I expect only marginal changes in 2018 when it comes to store hour openings and release of online sales.

The battle for retailers is a battle for attention. A battle to capture consumer attention. Expect retailers to focus on getting consumers into their app where their attention can be harvested and protected from the noise and distraction of competing retailers. Historically retailers focused their efforts on getting consumers into the physical store for many of the same reasons. That focus will continue to shift to their proprietary apps.

#3 Physical store traffic held up surprisingly well

Given the phenomenal growth in online shopping and online conversion rates, brick-and-mortar store traffic held up well over the week. ShopperTrak reported store traffic on Thanksgiving and Black Friday was down a combined 1.6 percent. RetailNext reported in-store traffic was down 4.5 percent on Black Friday and down 3.1 percent for Thanksgiving through Saturday. RetailNext reported traffic on Thanksgiving was actually up 6.7 percent – consistent with my earlier point that Black Friday continues to be pulled early and stretched later during the week.

Overall, I estimate store traffic was down slightly over the entire week and will be flat to down slightly for the entire holiday season. At the same time we are seeing improving in-store conversion rates as Cowen’s Oliver Chen noted. We still have 8 of the 10 busiest days left. Given the broader context of very strong online sales and improving in-store conversion rates, flat to down slightly brick-and-mortar store traffic is extremely positive.

Retailers continue to implement ways to drive future store traffic and repeat visits. Kohl’s offered Kohl’s Cash on Black Friday again this year in an effort to drive shoppers back into the store. Similarly, Old Navy offered Old Navy Super Cash for purchases made over the weekend that is redeemable through December 5th. These, and other similar initiatives, will likely help keep in-store conversion rates positive.

Retailers have also improved their omnichannel efficiency and execution as consumers have gotten more comfortable blurring the lines between their digital and brick-and-mortar shopping experience. Target for example reported receiving more than three times the number of Order Pickup orders on Thanksgiving 2017 when compared to last year.

#4 Tech categories continue to drive significant sales volume over the week

Tech drove significant sales volume over the week. Here are the storylines to follow:

Voice-activated digital assistants led tech sales over the week. 

Voice-activated digital assistants did extremely well over the weekend. My store checks found them broadly sold out across a wide number of retailers both in-store and online. Amazon reported millions of Alexa devices sold over the weekend. Amazon reported the Echo Dot was the #1 selling product on Amazon globally over the weekend, from any manufacturer in any category. They also reported the Echo Spot is sold out for the holiday season and any future orders will be delivered in the new year.

Roughly 15 percent of households have a voice-activated digital assistant. While I expect holiday sales will help propel this figure higher, the bigger shift is in higher density rates. Yes, there will be households who will add their first digital assistant this holiday season, but the bigger story is the large number of households adding to the number of digital assistants they own. They are adding them in secondary and tertiary rooms. I expect the number of children who have a voice-activated digital assistant in their room to increase significantly over the next few months. Looking forward, higher density rates will drive increased appetite for other Alexa and Google Home enabled connected products. I expect strong growth in this piece of the market in 2018.

Game Consoles had a very strong weekend

We are at an interesting intersection in the game console cycle. The historical cycle length of five years has widened for Microsoft and Sony over the most recent two game console cycles. Furthermore, both manufacturers have introduced inter-cycle models with the hope of driving sales and moving away from the traditional cycle dynamics. If Microsoft and Sony could have their way, we’d move completely away from a game console cycle. At the same time, Nintendo has stayed closely aligned to the traditional five year cycle. The Nintendo Wii was released in December 2006, the Wii Mini and Wii U were both released in 2012 and the Nintendo Switch was released this year.

The Xbox One and Sony PS4 were both released in 2013. Four years into the historical game console cycle would have us deep into the cycle. At this point we would see slowing sales and steep discounts as we began to prepare for the next console launch. Instead, Xbox One and PS4 both had very strong weekends. PlayStation Network’s Eric Lempel reported more PlayStation consoles sold this Black Friday than in the company’s history, making 2017 the biggest Black Friday in PlayStation’s 22 year history.

Sony’s Playstation VR headset also did well over the weekend, building on recent strength. According to media research firm Canalys, shipments of virtual reality headset surpassed one million units for the first time during the third quarter of 2017. Sony’s Playstation VR headset shipped an estimated 490,000 units, twice as many as Oculus Rift which saw an estimated 210,000 units shipped during the third quarter.

Composition shifts drive price declines.

Adobe reported prices for toys were down 18.8 percent on Black Friday while prices for computers were down 15.9 percent and prices for TVs were down 21.1 percent. A significant portion of these price declines are likely driven by composition shifts in the product assortment being offered during Black Friday. This is more about composition shifts and inventory make-up than price concessions. In recent years manufacturers and retailers have worked together to hit target price points for Black Friday. The type of price declines reported by Adobe is less about pricing coming down significantly and more about promotional price targets being achieved through selective product assortment custom designed for Black Friday promotions.

 

As a side note, Shopify, a multi-channel commerce platform, reported electronics was the sixth most purchased category over the weekend behind, apparel, accessories, housewares, shoes, and make-up. In past years, the Consumer Technology Association has reported consumer electronics is the third most frequently purchased category behind clothing and toys.

#5 Digitization will further upend holiday shopping in 2018. Here comes AI…

The growing share of online shopping will exert further change on how this week shapes up in 2018. It all comes down to capturing attention and driving conversion. Adobe reported search drove nearly half of online sales on CyberMonday. Organic search accounted for 18.8 percent and paid search accounted for 22.9 percent, which also saw the strongest year-over-year growth of 8.3 percent. Direct traffic was 24.8 percent of online traffic and email drove 24.9 percent. With Amazon accounting for an estimated half of all online transactions, driving online traffic will be the primary quest of all retailers in 2018. This must be their focus. To win online sales in the future, retailers will have to capture online traffic before it reaches Amazon. Remember, it’s a battle for consumer attention and consumers are settling on when they are willing to offer attention to retailers.

Once retailers have our attention, they have to drive conversion. AI will be a key tool in this endeavor in 2018. According to Salesforce, five percent of shoppers who engaged with AI-powered product recommendations accounted for 24 percent of revenue on CyberMonday. For Black Friday this relationship was even more pronounced – six percent of shoppers who engaged with AI-powered product recommendations accounted for 24 percent of revenue on CyberMonday. Personalization, driven by AI, will be the second biggest focus of retailers in 2018.

Here’s s quick recap of key metrics for select days: 

Wednesday 

Adobe reported $1.82 billion in online sales – a year-over-year increase of 17.7 percent.

Thanksgiving

Adobe reported online sales of $2.87 billion in sales, up 18.3 percent from last year. According to Hitwise, Amazon accounted for 45.1% of all online transactions (5.6 million transactions). Hitwise also reported Walmart had 1.74 million transactions on Thanksgiving, 13.9 percent of all online transactions. J.C. Penney reported its website received more visits on Thanksgiving than on any day in 2017 so far.

Black Friday

Adobe reported $5.03 billion in online sales, an increase of 16.9 percent over last year. Amazon accounted for 54.9 percent of all online transactions according to Hitwise (7.1 million transactions). At it’s peak, Black Friday was generating over one million dollars in sale every minute. Black Friday was the biggest day on record for FBI background checks. The FBI reported 203,000 background checks for gun sales on Friday.

Small Business Saturday

Adobe reported $2.43 billion in online sales, an increase of 10.8 percent over 2016. Adobe reported mobile traffic was 56.7 percent of overall online traffic while smartphone traffic was 46.5 percent of the total.

CyberMonday

According to Adobe, online sales totaled $6.59 billion on CyberMonday, a year-over-year increase of 16.8 percent. Overall web traffic to retailer sites was up 11.9 percent. Mobile accounted for 47.4 percent of visits (39.9 percent smartphones, 7.6 percent tablets) and 33.1 percent of total online purchases (24.1 percent smartphones 9 percent tablets). It is worth noting that smartphone traffic grew 22 percent compared to last year but online sales through smartphones grew 39.2 percent. According to Adobe, mobile transactions are closing at a 12 percent higher rate compared to Cyber Monday 2016.