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Retail: Online sales stand strong during this holiday season

Retailers have made changes to their assortments and have made efforts to improve their fulfilment options to make holiday shopping easier for customers

The retail industry took a significant hit this year due to the COVID-19 pandemic but it also saw a rapid shift to online shopping. The companies which had invested meaningfully in building strong omnichannel capabilities benefited the most during this time. Those who did not were forced to pull up their socks and join the crowd.

In the midst of another holiday season, one that is very different than those past, the focus falls on holiday shopping and sales. For the most part of this year, retailers have been posting strong performance in their digital channels during quarterly earnings reports, and the same momentum is expected during the holidays.

Holiday sales

As another Thanksgiving weekend passes by, digital sales witnessed strong gains as people preferred to shop online as opposed to in stores. Data from Adobe Analytics shows that online sales increased 22% to $9 billion on Black Friday in 2020 compared to 2019.

According to a report by the National Retail Federation, holiday sales during November and December are estimated to increase 3.6-5.2% to a range of $755.3 billion and $766.7 billion compared to last year. The NRF also expects online and other non-store sales to increase 20-30% to $202.5-218.4 billion.

Digital strength

Most of the major retailers reported strong digital sales throughout the pandemic period and they expect this trend to continue in the coming months. (NASDAQ: AMZN), the leader in ecommerce reported total sales growth of 37% in its most recent quarter. Sales from online stores were up 38% during the period while sales from physical stores were down 10%.  

For its third quarter of 2021, Walmart (NYSE: WMT) saw its US ecommerce sales rise 79% with strong results across all channels. Sam’s Club ecommerce sales grew 41%.

Target (NYSE: TGT) was a big winner with digital comps rising 155% in its most recent quarter. The company benefited significantly from its same-day delivery services, Pick Up, Drive Up and Shipt, which together grew 200% from the previous year.

Best Buy (NYSE: BBY) saw online sales increase 174% during its most recent quarter, making up 35% of total domestic sales. These were facilitated by services such as contactless curbside pickup as well as same-day or next-day delivery options.

Macy’s (NYSE: M) saw its digital sales rise 27% from the prior-year period with digital penetration increasing to around 38%. Kohl’s Corp. (NYSE: KSS) witnessed a 25% growth in digital sales which made up 32% of total sales.

Retailers have made changes to their assortments and have made efforts to improve their fulfilment options to make holiday shopping easier for customers. The digital momentum can be expected to pick up significantly during the Christmas/New Year period reaping significant benefits for the retail industry.

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