By now many of you have probably seen the reports of somewhat disappointing Black Friday turnout from the National Retail Federation1, but an analysis of transaction volumes of businesses participating in the ID Network® over the shopping weekend, suggests that 1) total volume was up compared to the same period last year; and 2) many of us were making our purchases using newly established credit lines, particularly using new store branded cards.
How can we account for the disparity in these numbers? We suspect that the traditional, time-focused Black Friday retail experience may be coming to an end. According to IBM’s U.S. Retail Black Friday Report, “Overall Black Friday online sales were up 9.5 percent year-over-year with mobile devices accounting for one-in-four of all online purchases.2 Additionally, many retailers pre-loaded the holiday shopping experience. An increase in online sales on Thanksgiving Day may have cannibalized Black Friday business, and major retailers including Target, Walmart and Macy’s began offering discounted pricing as early as Halloween, encouraging many consumers to purchase ahead of Black Friday sales. Some shoppers expressed that Black Friday is not as appealing as it once was. “While they’re (shoppers) more optimistic, they’re very cautious.” Matt Shay, CEO National Retail Federation.
Reports from comScore echoed these results, Chairman Fian Fulgone stated that “Thanksgiving and Black Friday both saw exceptionally strong online growth rates as each day surpassed $1 billion in desktop spending,” and comScore reported that $22.7 billion has been spent online for the holiday season-to-date which represents a 15-percent increase over the same period the previous year.4
The National Retail Foundation’s (NRF) report cited declines in both volume of shoppers and spending. Despite this, the NRF is still predicting a 4.1 percent increase in sales for the holiday shopping season – the greatest increase since 2011. It’s important to note that the NRF’s Black Friday numbers are based on estimates from preliminary surveys of 4,631 shoppers rather than actual sales data.1
Benchmarking data from the ID Network shows a significant increase in Black Friday credit applications over last year, which could indicate an upward trend in spending during the holiday shopping season, despite lower-than-expected sales on Black Friday. According to a Bankrate.com survey, 24 percent of in-store shoppers and 46 percent of online shoppers, planned to use credit cards on Black Friday.5
The strong increase in online and mobile purchases could also mean a spike in account takeover and card-not-present fraud, so retailers should be prepared to effectively evaluate transaction and application data to prevent significant losses during the holiday shopping surge.
Ken Meiser is the Vice President of Identity Solutions at ID Analytics.
1 Grannis, Kathy and Reynolds, Treacy, National Retail Federation. (30 November 2014) Early Promotions, Online Shopping and Improving Economy Changing the Face of Black Friday Weekend, retrieved December 2, 2014 from https://nrf.com/media/press-releases/early-promotions-online-shopping-and-improving-economy-changing-the-face-of
2 U.S. Retail Black Friday Report 2014, IBM ExperienceOne November 2014
4 comScore (30 November 2014) Thanksgiving and Black Friday See Online Buying Bonanza as Both Days Surpass $1 Billion in Desktop Spending. retrieved from http://www.comscore.com/Insights/Press-Releases/2014/11/Thanksgiving-and-Black-Friday-See-Online-Buying-Bonanza-as-Both-Days-Surpass-1-Billion-in-Desktop-Spending<
5 Skowronski, Jeanine Bankrate.com (19 November 2014) Is Black Friday dead? Retrieved December 3, 2014 from http://www.bankrate.com/finance/smart-spending/is-black-friday-dead.aspx