On-line retail sales growth continues to out-pace brick & mortar sales growth across the retail industry. With the holiday selling season ramping up, e-commerce retailers are seeing some fundamental shifts in the buying patterns with “Cyber Monday” stretching out to include the entire preceding weekend. Much of the shift in shopping patterns and timing is due in part to the fact that a much larger percentage of the U.S. population has high-speed Internet access at home. According to the Pew Internet Research Project, at the end of March 2006, 42% of Americans had high-speed at home, up from 30% in March 2005, or a 40% increase. Consumers no longer have to wait to get back to work the Monday following Thanksgiving to ramp up their on-line holiday shopping.
This increase in home high-speed Internet access caused Black Friday to be not only a traditional brick & mortar retail event, but also an Internet event for the first time this year. This, in turn, is making Cyber Monday a less important event for on-line retailers.
“Our weekend was super strong,” said Chris Peake, athletic buyer for Zappos.com, in a conversation with Sports Executive Weekly. “Our sales were up. We expected it to jump, but on Black Friday — starting at maybe 4:00 p.m. — we saw a huge increase over what we normally see. I think a lot of people were kind of frustrated with brick & mortar and they just came home and started shopping. Cyber Monday was great for us, but it was actually the Sunday before that was our record-breaking day.”
While Cyber Monday is still seen by many as the kick off to the holiday shopping season for on-line retailers, the day is certainly losing importance. “Weve done well on Cyber Monday, but its never been our biggest volume day. Somewhere between the 11th and the 13th there is always a bigger day,” said Bob Leiwald, EVP of sporting goods for GSI Commerce. “While it is a better Monday than most, it isnt like Black Friday for brick & mortar.”
Zappos is seeing athletic footwear pick up considerably compared to last year.
“Our New Balance sales — New Balance is our number one athletic brand –, for the first part of this month have been awesome. Generally running for us has been strong. Asics sales are also up and is actually in the top 30 [best selling brands] for us and that really never happens this time of year.
“We usually see a lot of brown shoe brands covering the top 50 for December. This year, we actually have a handful of athletic brands in the top 50,” said Peake. “Converse continues to do very well for us, Vans continues to perform. Were actually seeing huge growth with Vans right now. adidas and Puma, their sales are definitely up for us, but theyre not as hot as the brands I just mentioned.”
When asked about must-have items, Leiwald responded without hesitation, “Heelys.” Other items that he cited as strong were TNFs Denali and Khumbu jackets, along with Columbia and Under Armour winter apparel. “We did very well early in the season and then it kind of leveled off a bit with ski and snowboard jackets, particularly in womens. Obviously on the east coast with temperatures near 70 degrees, we really expect this weekend and next to be phenomenal with the colder weather moving back in.”
Peake agreed that Heelys is probably the “must have” item of the season. “Heelys has been absolutely on fire for kids. They have consistently been a top-five account for us since the latter half of November. Actually the whole year, if we have the inventory, they have just been blowing off the shelf. They have been pretty much our number two brand for the last month and a half. We cant get enough of them right now. Our number one brand is UGG they also blow off the shelves this time of year.”
Apart from footwear and apparel, hardgoods are performing well, but there are no big selling items to drive the category. “Nothing is really moving off the charts, but its been a pretty solid business, said Liewald. “Its a little slow in big exercise equipment and table games so far. On the high-end, balls are selling well the new basketball, the new football.”
In addition, according to PriceGrabber.com, the top selling sporting goods items this year have been Callaway Golfs X-Tour Irons, the Razor Dirt Quad, and the Edge 491r Recumbent Bike. Also, TNFs Denali womens jacket and UGGs Australia Classic Tall Boots were mentioned as top
selling apparel.
The on-line market place continues to grow rapidly in size, and at the same time new competitors are appearing every day. With barriers to entry relatively low, the marketplace is becoming more promotional.
“Its getting more promotional across the board,” said Leiwald. “We pulled back this year pretty significantly. There are two levers basically; there are product promotions and then free shipping. So weve done a little bit of promotion this year, and what weve done, is instead of giving shipping away we subsidize, like 50% off or free shipping over $99.”
At the same time, the immediacy of the on-line marketplace allows more sophisticated retailers to mold their promotions much more effectively. Leiwald continued, “Thats the beauty of our system; we see it hourly, not just daily. If we want to make a change, we can measure it really quickly. So next week we could take a treadmill down $50 or take $50 off of shipping and see which one works better.”
>>> While the marketplace is getting more competitive and retailers are refining their marketing and merchandising messages, overall, the athletic lifestyle and sporting goods markets are performing well in the on-line realm. In addition, this is the first year in at least five years where a sporting goods item is the must-have item of the year. Both brick & mortar and on-line retailers are clearly ready to capitalize on this opportunity…
