Judging by the headlines, the Grinch descended from Mt. Crumpit on Black Friday and stole Christmas – or at least the shoppers that would make Christmas merry for the U.S, economy. A Google search of the term “Black Friday” on December 3rd pulled up “Who Killed Black Friday,” as its top result and “Black Friday Revealed How Poor Americans Really Are,” in the number two spot. The results don’t get much sunnier as one scrolls down the page: “Why Black Friday Sales Were A Bust,” “Target, Walmart Slump As Black Friday Really Is A Black Friday,” and perhaps most ominously “Gun Sales Boom On Black Friday.”
The stock market didn’t seem to like what to them appeared to be a slow start to holiday sales, either. Macy’s stock fell 3 percent on the Monday following Black Friday (Dec. 1), closing at $63.19. Target shares were down 2 percent, while Best Buy lost an entire 6 percent ($2.15) on the reports of a slower than expected sales day.
An 11 percent drop in sales has clearly been put a damper on everyone’s retail enthusiasm.
Or almost everyone’s.
PayPal’s Head of Global Consumer Initiatives, Pablo Rodriguez, feels less apocalyptically about the Thanksgiving and Black Friday results than the typical consumer payments guy. PayPal’s numbers over the holiday shopping weekend don’t indicate a retail segment on life support. Worldwide, PayPal’s total mobile volume was up 52 percent during the holiday shopping season’s “kick-off” weekend. Rodriguez told MPD CEO Karen Webster that, this year, the storyline shouldn’t be so much about disappearing consumers, but rather, on changing consumers and the role of mobile in shaping their shopping journey.
Rodriguez and his colleague, PayPal’s Director of Global Merchant & Cross Border Trade Initiatives, Melissa O’Malley, sat down with Webster in the first of a series of conversations about the changing face of mobile commerce around the world, and outlined the five ways this year’s early holiday shopping results are a sign of just how much mobile is changing the consumer’s relationship to retail.
“It was fascinating for me to see the photos of shoppers this year in the brick-and-mortar stores whose carts were filled,” Rodriguez told Webster when describing the mass media images of Black Friday he saw this year. “I think there’s still the importance of ‘the get’ for those who want to go out in stores and explore. But even those consumers are still using their mobile devices to compare prices and to even shop for items online while waiting in line to pay.”
Additionally, O’Malley pointed out, as smartphones continue to push toward ubiquity, they are increasingly a part of the background action of life. Like it or not, she said, almost no one thinks looking at or interacting with a smartphone is impolite or unusual and that means that consumers are plugged in and looking for things—and things to buy–more often. Merchants know that and, often with an assist from PayPal’s mobile app, want to do everything they can to make it easy for consumers to get relevant offers and then to move thru the checkout experience without friction.
“It used to be there was a circular, it was the big Sunday newspaper, the Sears Roebuck catalogue, and consumers had to go from there to the store to buy those things that they saw. But now it’s happening at their fingertips,” O’Malley noted.
And it’s also happening earlier and more consistently throughout the holiday season. Some merchants have been offering discounts since September, according to Rodriguez, and most are treating the month of December as a 30-day extension of Cyber Monday.
“You can call it a Cyber Month,” he joked.
However, whether consumers shopped extra-early, or are just price watching through the largely discounted month of December, mobile has successfully decentralized holiday shopping.
“I think consumers are really looking and leveraging their mobile devices to pay with what they want where they want. It’s not that necessarily we’re seeing a complete abandonment of Black Friday and Cyber Monday but they’re not the moments in time that I think consumers used to rely on in the past,” Rodriguez told Webster.
Webster wasn’t quite ready to concede that September is the right time to start Christmas shopping, but she did note that Cyber Monday first became an event because people needed a high speed connection to do their online shopping and that “in the old days” they were more likely to have those at work. That’s just not the case anymore, as now it’s easy to retire from the Thanksgiving dinner table with an iPad and shop.
It’s also easy, as it turns out, for consumers to kill time while they wait to eat their Turkey on Thanksgiving with mobile commerce–and the first sales spike of the day came on Thanksgiving around 1pm EST.
And those numbers really did spike. When Webster spoke to the PayPalers, their Thanksgiving-Black Friday-Cyber Monday numbers were just rolling in. Rodriguez told Webster that the story in the U.S. and around the world told was about a jump in the number of consumers going mobile over that period.
Worldwide, PayPal’s total mobile volume was up 52 percent during the holiday shopping seaon’s “kick-off” weekend, with the biggest increase – 62 percent – seen on Black Friday (when curiously, shoppers also really got going with e-commerce at around 1pm EST). The climb on Cyber-Monday was less steep but still notable at 39 percent.
Rodriguez told Webster he was initially surprised by the 47 percent jump on Thanksgiving Day, a day he more typically associated more with cooking, eating, watching football and napping than shopping.
“I was surprised until [my friend] told me about how her family celebrated the holiday. ‘We finished our meal around five. Some of our family members were playing games, I started watching TV with my Mom. She turned to me on the couch and asked me what I wanted for Christmas. I showed her by grabbing my phone and pulling up a picture of the purse that I wanted. She grabbed her iPad and bought it right then and there.”
Pop quiz–what city in the U.S. saw the most mobile traffic during the Thanksgiving shopping weekend?
Raise your hand if you said Chicago.
Surprised? So was transplanted New Yorker Rodriguez.
“I’ll be interested to have this conversation a year from now,” Rodriguez noting the somewhat surprising result.
Also in the top three were Houston and Los Angeles (in that order).
More surprising than the U.S. hotspots though, is the international interest in Black Friday. The shopping holiday may have been born in Philly in 1961, but it’s now gone global.
“We all agree that there is a bit of a cross-border trade story here,” Rodriguez told Webster,” because we see merchants here in the US entice overseas consumers with their deals.”
Moreover, those international consumers are responding, and additionally attuning their consumption habits around American retailers and Black Friday/Cyber Monday.
When PayPal looked into what mobile consumers are purchasing, fashion and jewelry were far and away the leaders – doubling the sales of the traditional online favorite, consumer electronics which placed third.
“That’s a global statistic,” noted Rodriguez.
Bigger than the change in what consumers are buying, which Rodriguez suggested might look somewhat different for US consumers or if spending on jewelry was taken out of the numbers, is the increasingly global profile of the mobile shopper, which has evolved to include the mobile device.
If the connected, savvy and global consumer is the shape of things to come for merchants, than it’s PayPal job, according to both Rodriguez and O’Malley, to help make it as easy as possible for those customers to get what they want safely and securely when they use their mobile devices to shop.
Part of that is helping consumers discover the things they want – and the deals that they can use to get those things – in one easy place.
One of those efforts is called Holiday Hub, a portal where PayPal has aggregated a variety of holiday deals from large and small retailers for consumers. The program also has popped up in a variety of real-world locations to help users enable their phones for use in brick-and-mortar retail locations.
“It’s just another way to help consumers take advantage of cost savings and offer an enjoyable and quick and easy and safe shopping experience,” Rodriguez noted.
But more than just this visible holiday-centric effort, PayPal’s efforts in this arena are actually the culmination of fifteen years’ worth of work in developing a presence on all corners of internet commerce and building its reputation for transacting online in a secure and frictionless way.
“This is an ecosystem and we are proud to have been part of this conversation and evolution for the past 15 years,” Rodriguez remarked.
PayPal’s ability to combine the interests of their consumers, merchants and developers, Rodriguez said, means that their customers have a key leg-up when it comes to checking out on a mobile device where they hit one button, instead of trying to enter in all of their information into a tiny, tiny screen.
“Merchants and consumers are getting more savvy,” Rordiguez said of the global mobile customer, “Consumers will come to expect – and demand – easy transactions and not necessarily have a high tolerance if the convenience factor is not met.”
Though writing the obituary for the coming retail season is tempting, it’s worth noting that historically speaking, Black Friday sales aren’t really all that correlated with holiday retail success or failure. In 2008, Black Friday sales were strong, but overall seasonal spending was weak as consumers braced themselves for the financial crisis that was upon them. In 2004, Black Friday (and Thanksgiving weekend) sales were weak, but overall sales exceeded expectations. One tidbit that may point to what retailer’s expect overall – employment numbers are up as was pre-season hiring among retailers, which tends to be more strongly correlated with their expectation of strong overall holiday sales.
In the end, Rodriguez and O’Malley believe that, contrary to popular expectations, the challenge this year may not be getting consumers to shop. Instead it might be more important to find ways for retailers to reach them in all the new ways they’re trying to buy.
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