Unsettling news for landlords: Online retailers killed it this holiday season

Holiday spending increased 3.4 percent from Nov. 1 to Dec. 24, one report found

Dec.December 27, 2019 02:15 PM
Holiday spending was up this year — especially online (Credit: iStock)

Holiday spending was up this year — especially online (Credit: iStock)

Americans spent more money than ever this holiday season — but shoppers are increasingly doing so online.

Overall retail spending jumped 3.4 percent over the holidays, according to a recent report from Mastercard. But the biggest gains came from shopping on e-commerce platforms, as online purchases made up 14.6 percent of the sales. That’s an increase of 18.8 percent over last year.

It’s undeniable that the rise of online shopping has taken a toll on slow-to-adapt retailers. So far in 2019, U.S. retailers have moved to close 9,275 stores this year, a figure that has far exceeded the store closures of 2018, according to the latest store tracker report from data firm Coresight Research.

Charlotte Russe, a discount young women’s apparel store that mostly has stores in enclosed malls, acknowledged it failed to balance its need for a strong online presence when it filed for bankruptcy earlier this year. The move led to hundreds of store closures.

Still, the trend toward online shopping doesn’t mean outright doom-and-gloom in the world of brick-and-mortar.

Anjee Solanki, the national director of retail services USA for Colliers International, told The Real Deal that consumers tend to spend more when shopping in-store than online. Web-based brands are also increasingly opening physical storefronts to better deal with competition, too.

“It’s no wonder that some e-commerce brands are shifting to brick-and-mortar to protect their profit margins,” she said.

Partly due to a later than usual Thanksgiving holiday, retailers in 2019 opted for an omnichannel approach by meeting consumer demand at physical locations as well as online, said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated.

The National Retail Federation’s early December report found that over 189 million Americans — the most ever recorded, and 14 percent more than last year — shopped from Thanksgiving through Cyber Monday. In fact, the spending done on Cyber Monday, where shoppers can take advantage of online deals, made up a sizable chunk of total holiday retail sales this year. Purchases that day comprised almost a quarter of the purchases, according to Mastercard’s figures. That’s compared to 15.4 percent on Black Friday, per Mastercard, which tracked sales from Nov. 1 to Dec. 24.

Meanwhile, the NRF found that over the five-day Thanksgiving weekend period it tracked, 124 million people shopped in stores, 142.2 million shopped online, and about 76 million did both.

Americans also spent more than they had in prior years. Shoppers on average shelled out almost $362 over those five days, a 16 percent spike from 2018, according to the NRF.

One online retailer that did particularly well this holiday season was Amazon. The e-commerce giant on Thursday said that the number of items delivered with Prime free one-day and Prime free same-day shipping quadrupled from last year, and the most popular items stemmed from the toys, fashion, home and beauty departments. Amazon said customers ordered more than 500 million items from those categories.

Department stores lagged this year, as these stores saw a 1.8 percent drop in retail sales, according to Mastercard. And while shopping on department store websites increased 6.9 percent, that was the lowest growth among the categories Mastercard tracked.

Overall, apparel companies, which had seen a wave of bankruptcies and store closures this year, saw a 1 percent year-over-year bump in purchases and a 17 percent growth in online purchases — the highest growth among the groups Mastercard monitored.

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