The Christmas Shopping Battle: Early Winners and Losers
Nov 27th 2012 7:30AM
Updated Nov 27th 2012 8:04AM
Walmart (WMT) just enjoyed its best Black Friday ever. At its strongest, it was selling 5,000 items per second.
Please hold your applause: While other brick-and-mortar stores' foot traffic trended higher, overall Black Friday revenue dropped nearly 2 percent compared to last year, according to ShopperTrak.
Some of this weakness is because many retailers opened their doors on Thanksgiving (taking away traffic from the following day). But it's also because many Black Friday bargain-hunters sought or will seek their deals online. There's a battle for your holiday spending dollars this year. Here's how it's shaking out across the retail landscape.
Brick and Mortar Keeps Losing to Online
Online retailers' shopping season is off to a much stronger start than that of brick and mortar stores. According to IBM Benchmark, online sales were up 21 percent on Black Friday and 17 percent on Thanksgiving compared to last year.
Walmart sailed into the headwinds of this trend by offering many of its Black Friday deals both in stores and online. It's also offering $10 flat-rate, same-day delivery in select cities for online orders leading up to Christmas in an attempt to compete with Amazon (AMZN). Target (TGT) is also price-matching Amazon on any item it stocks.
But all of these attempts to catch-up with Amazon -- the king of online retail -- may be futile, because Jeff Bezos has grown Amazon into the obvious choice for online shopping. He often states, "Your margin is my opportunity," which is why Amazon consistently has the lowest prices -- and is the reason why other retailers find it hard to compete with the e-tailer.
Amazon has repeatedly proven itself willing to sacrifice short-term margins to attract long-term customers. In another attempt to do so this year, Amazon is offering the option to sign up for a monthly subscription to its Amazon Prime service, which gives free two-day shipping. It has also has started installing delivery-storage lockers inside of Staples stores -- a convenient option for apartment-dwellers and other shoppers who worry about having high-priced items left on their front porch.
So in the battle for online spending, Amazon is the clear winner.
Another Winner: the Environment
Toys R Us CEO Jerry Storch recently told the Financial Times that online shopping is "very ungreen."
But science doesn't back him up: Research shows that online shopping is better for the environment than shopping the old-fashioned method of bundling up and hitting the road then fighting for a parking space in a packed lot.
University studies have shown that home delivery from shopping online generates fewer carbon dioxide emissions than the average shopping trip, according to a university in Scotland. Carnegie Mellon confirmed this, stating carbon emissions are as much as 35 percent lower.
So, as long as long as online shopping wins over consumers, the environment wins as well. Which brings us to a final casualty of the battle for Christmas cash...
Collateral Damage: Family Time
For retailers, most holidays -- but especially Christmas -- are merely "a good reason to promote something and drive traffic," retail research consultant Marshal Cohen recently told Marketwatch.
No one's surprised by this, but a real problem comes when retailers force their employees into "a situation where they must choose between keeping their jobs or spending quality time with their families," as Harrington Investments recently accused Target of doing.
So while brick and mortar stores have to lure their staff to work on holidays to keep up with their competition, online retailers can accept orders without having as much staff on hand. It also allows customers to stay at home with their families to find bargains.
This article was written by Motley Fool analyst Adam J. Wiederman. A new FREE report from the Motley Fool labels Amazon as one of the "Cash Kings of Retail." To see the other name and read the entire report -- again completely free -- simply click here.
Gallery: Pop Quiz: Black Friday