Black Friday Sales Hits Record, Retail traffic and Foot-falls up.

Preliminary reports for Black Friday indicate that retailers may have seen their strongest sales ever during the all-important kick-off to the holiday shopping season.

black friday sales

Retail sales on Black Friday climbed 6.6% this year to an estimated $11.4 billion, according to ShopperTrak, which tracks foot traffic at malls and stores. Last year, sales climbed just 0.3% to $10.7 billion, which was a record one-day sales amount at the time, according to the company.

“This is the largest year-over-year gain in ShopperTrak’s National Retail Sales Estimate for Black Friday since the 8.3 percent increase we saw between 2007 and 2006,” said ShopperTrak founder Bill Martin. “Still, it’s just one day. It remains to be seen whether consumers will sustain this behavior through the holiday shopping season.”

However, sales have been strong throughout the entire month of November with retailers rolling out holiday deals earlier than ever. In the two weeks leading up to the week of Black Friday, retail sales were up 3.6% and 3.8%, respectively, ShopperTrak reported.

“Retailers continue to stretch out Black Friday weekend by enticing shoppers with doorbuster deals weeks in advance,” said Martin.

Online sales have also proven to be strong, with many big-box retailers and department stores offering deals online earlier this year.

Black Friday online sales surge 24%

Online sales were up 39.3% on Thanksgiving Day and 24.3% on Black Friday compared to the same days last year, according to IBM’s (IBM,Fortune 500) Coremetrics, which tracks real-time data from 500 retailers in the apparel, department store, health and beauty and home goods categories.

“This year marked Thanksgiving’s emergence as the first big spending day of the 2011 holiday season with a record number of consumers shifting their focus from turkey to tablets and the search for the best deals,” said John Squire, chief strategy officer at IBM’s Smarter Commerce division.

Consumers also spent slightly more than they did last year, although they spent most of that money on themselves. According to NPD Group consumers spent about 3% more on purchases during Black Friday. However, about 44% were self purchases up from 33% last year, the research group said.

Retail traffic on Black Friday up 2%

Total US visits to the top 500 Retail websites increased 2% on Black Friday as compared to 2010 and received more than 173 million US visits. Traffic has increased each day leading up to the Thanksgiving holiday and the total visits dipped slightly (-1%) on Black Friday compared Thanksgiving Day 2011. Early Black Friday sales resulted in a shift of online traffic, which climbed prior to the Thanksgiving holiday, however, continued heavy promotional activity helped to drive significant online traffic on both Thanksgiving and Black Friday. While Black Friday has been the top day for online retail traffic over the past two years, warm weather and early store openings encouraged shoppers to go online sooner this season.
DMS Retail 500 11-25-2011.png

Among the categories driving the growth in traffic on Black Friday were Department Stores (e.g. Amazon and Wal-Mart) Apparel & Accessories, Appliances & Electronics (e.g. Best Buy) and Video & Games (e.g. Game Stop).
DMS Retail Categories 11-25-2011.png

Below is a list of the top visited retail sites on Black Friday:
DMS Retail 500 Sites 11-25-2011.png

Many of the major retail websites experienced growth on Black Friday, including Amazon, Best Buy, JC Penney, Sears and Kohl’s. Amazon.com was the most visited website on Black Friday for the 7th year in a row.

Beauty business set to boom.

Beauty consciousness has dawned on rising affluence. With an increase in the number of households upgrading to a higher consumption lifestyle, there is an explosion of growth in the Indian beauty space. Consider the Living Standard Measurement (LSM) classification, which is the new socio-economic classification to gauge consumption patterns : between LSM 1-4 , which is the lowest level, and LSM 8-plus (top end), there has been an 80-fold jump in growth in the consumption of beauty products and services. 

That explains why a Hindustan Unilever (HUL) is speeding up to open a Lakme salon a week. Or how a Jawed Habib Hair & Beauty (JHHB), which has grown from 37 salons in 2006 to around 225 at the end of November 2010, is eyeing a similar growth. Or why foreign chains like the contemporary French beauty salon, Jean-Claude Biguine, with annual revenues of 150 million euros, are setting up salons to groom the Indian consumer.Clearly, the predominantly unorganized locally run beauty salon market is at an inflection point. The mushrooming of branded chains like Lakme is expected to change the landscape completely a few years down the line, ushering in a new era of trained salon personnel, offering services based on global insights and professional products strutting the latest international technologies.”Step back and look at the way consumption has changed in India. Growing affluence has resulted in increased experimentation. This has accelerated the growth of beauty categories. You see this explosive growth in beauty services as well. Salons are at the centre of that growth. So it’s a big opportunity . A couple of years ago, we really decided to pick beauty as a theme. We have dramatically stepped up investment, innovation and go to market capabilities behind our entire beauty portfolio. And the Lakme brand is core to beauty. We see the Lakme business building scale within beauty,” said Gopal Vittal, executive director – home and personal care (HPC), HUL.

With close to 150 salons at present, HUL is scaling up rapidly , setting up one Lakme salon per week. The ambition is audacious. If one does the math, there would be about 200 Lakme salons a year down the line. But HUL would rather scale up this ambition to open 2 salons per week, if it has its way. Is there really room for so many? “We believe that there is room to keep adding salons for now. But what is crucial is to be true to the business model – the right return on capital, the right cost structure and the right people,” said Vittal.

“Currently, Indian hair and beauty industry is seeing a per capita annual spend of only $1.2, which is far lower than world standards. We are expecting this number to grow to $5 by 2015. So, in terms of market potential , there is no problem, however, only those companies which can have strong manpower and can overcome the hurdles of the industry can sustain this growth,” said Rohit Arora, executive director, JHHB. The Rs 23-crore firm has proposed to tap the capital market with an initial public offering of Rs 60 crore.

The roughly Rs 7,000 crore organized and unorganized hair and beauty industry is growing at the CAGR of 35%. At this rate, it has the potential to become a Rs-30 ,000 crore business by 2015.

Professionalization of salons 

About 18 months ago, when HUL took a closer look at its salons business under Lakme, it realized that the traditional methods of running an FMCG company would not apply here. The company set up a 100% subsidiary where Lakme was housed and looked after by a dedicated team having a separate CEO. The business got the attention it needed at a time when beauty was developing wings to take off in India. “The purpose of setting up a separate subsidiary that is still nested within the HPC business was to ensure focus and the right culture. And what is important is to build capabilities that are structural and sustainable ,” said Vittal.

In addition, HUL realized it required high-quality trained staff to have an edge. It has now launched a beauty academy with the objective to provide in house training to stylists. For this, HUL has forged an alliance with Pivot Point, a leading beauty training company in the US.

Providing financial metrics was another important task because a salon business operates on a return on capital employed kind of business and not the gross margin kind. “It took us six months to perfect the model. Now we have got a reasonably good grip on how we need to go about it. We’ve understood the levers and we are ready to scale up. So in the last few months we are adding a salon a week. But even as we do that, we have to keep our eye on same salon growth. And we are pleased with the 20% odd growths that we are seeing there,” said Vittal.

As a next step, HUL wants to closely inter-link the product business and the salon business . It has created a Lakme brand council which will advise on product innovation. HUL has already launched Unilever’s global professional product brand TIGI and hopes to build the salon brand in a major way. It has also tied up with global partners—Toly (based in Malta) for packaging structures and applicators, Fiabila in France for Nail Enamel, Schwann Stabilo in Germany for all pencils and pencil applicators and Intercos in Italy for lipsticks, eye shadow and face make up.

With national players expanding their base, will the unorganized market eventually be devoured? “It will take time before anyone or few large branded players take a larger share of this market. However, we are expecting the consolidation to happen at the organized level in the coming years. Local players will continue to exist, considering that there are low barriers to entry in this sector,” said Arora. While no organized player can hold a substantial share of this market, Arora said “the pipeline is big enough for many players” .

Perhaps, till the government sets up a regulatory system , it’s going to be a beauty rush for all.

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