Online holiday spending total falls short
Reston, Va. — A report released Friday by comScore showed that holiday online spending grew 14% year-over-year to $42.3 billion, as individual shopping days reached record spending levels.
Total results, however, fell slightly short of early-season predictions, as softer-than-expected buying occurred during the early to mid weeks of the period.
“This year’s season did not quite perform up to our initial expectation for growth rates in excess of 16% as we fell a billion dollars short of our expected total of $43.4 billion,” said comScore chairman Gian Fulgoni. “While November started out at a very healthy 16% growth rate through the promotional period of Thanksgiving, Black Friday and Cyber Monday, consumers almost immediately pulled back on spending, apparently due to concerns over the looming fiscal cliff and what that might mean for their household budgets in 2013.”
Several individual days saw particularly strong growth, including Free Shipping Day on Monday, Dec. 17 (up 76% to $1.013 billion) and Christmas Day (up 36% to $288 million), but they could not make up for the spending growth shortfall earlier in the month.
comScore’s analysis of weekly online holiday spending totals showed how spending growth softened during the three most important spending weeks of the holiday season. Following four weeks of growth in the mid-to-high teens, each of the next three weeks failed to surpass a 12% growth rate despite their record-setting spending totals (including the first ever $7 billion week for the week ending Dec. 16). The highly variable growth rates in the final two weeks (extremely high in the penultimate week and extremely low in the final week) are primarily a function of the way the calendar fell in relation to Christmas, said Fulgoni.
"While it is typical to see growth rates subside slightly during the week after Thanksgiving, the amplified and sustained lull this year came as something of a surprise,” he said. December’s swoon coincided with a significant decline in the University of Michigan consumer sentiment index that was attributed in large part to consumers’ fiscal cliff concerns, he explained.
The top 10 heaviest days for online spending in 2012 all occurred during the holiday shopping period. The season was once again led by Cyber Monday (Nov. 26) with a record $1.465 billion in spending, followed by Tuesday, Dec. 4 with $1.362 billion and Green Monday (Dec. 10) with $1.275 billion.
Rounding out the top 10 were Tuesday, Nov. 27; Tuesday, Dec. 11; Friday, Dec. 14; Thursday, Dec. 13; Monday, Dec. 3; Wednesday, Nov. 28; and Wednesday, Dec. 5.
Format experimentation on international agenda
Walmart SVP Lev Khasis was elevated to the new role of president and CEO of new formats for Walmart International, according Reuters and Bloomberg reports citing a Walmart spokesman.
Khasis joined Walmart in 2011 after working for Russian retailer X5, a company Walmart reportedly had an interest in acquiring. The spokesman said Khasis will focus on developing store concepts that can be deployed across markets.
"Lev has a track record of developing innovative formats, and he will now focus on developing new concepts that can be deployed across our markets to provide future growth," Walmart spokesman Kevin Gardner was quoted as saying.
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Will Safeway come calling on Walmart
Top food executives at Walmart are presumably in the crosshairs of Safeway recruiters now that longtime chairman and CEO Steve Burd has announced his retirement.
Burd intends to step down at Safeway’s May 14 shareholders’ meeting so the company has time to locate a successor from internal as well as external candidates. When it comes to external prospects, Walmart is often a source retail competitors turn to for senior leadership and the challenge of leading Safeway could be appealing and potentially lucrative. The company is one of the nation’s largest food retailers with 1,644 stores and annual sales of roughly $43.6 billion.
"The company is gaining market share with each passing quarter. We have developed the most sophisticated digital marketing platform in retail, we are implementing the most comprehensive and personalized fuel loyalty program, and we will be rolling out a wellness initiative that has the potential to transform the company," Burd said.
According to the company, under Burd’s leadership Safeway established a culture of thrift and capital discipline, created an industry-leading customer service program, developed a "Lifestyle" store format that introduced a never before seen level of perishable product quality and formed a leading prepaid payment network that is among the world’s largest distributors of gift cards.
If Safeway does poach an executive from the ranks of Walmart’s senior leadership they will learn, as have others before them, that success at Walmart doesn’t always translate to the new organization. Countless examples of this phenomenon exist, but the most recent one involves former Walmart international executive Craig Herkert who left to become CEO at Supervalu only to leave the company after being unable to execute a turnaround.
Safeway is in better shape that Supervalu, but whoever takes the top job is going to have their hands full managing a unionized labor force, a moderately declining store base and market share that is under relentless attached from conventional supermarket retailers and unconventional competitors. The company is marginally profitable, it has long term debt of $6.4 billion and its share price has been in steady decline for the past decade.
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