This time of year is known for its blitz of shopping news: deals, trends, analysis. But a week before Black Friday, we at Foursquare have insights into expected foot traffic and in-store visits like no other technology company. How? We understand the consumer's physical journey in unique and groundbreaking ways.
Although in-store shopping is declining and e-commerce is growing wildly, over ninety percent of commerce still happens in the real world. As a location intelligence company that delivers best-in-class consumer experiences, Foursquare keeps up with millions of phones as they visit malls, boutique shops, big-box chains and the like. Our data has an extremely tight correlation with business results. We've proven it again and again.
In this new holiday analysis, we reviewed our data on past gifting seasons to understand what we'll see in 2016. The headline: Overall 2016 Black Friday foot traffic will be down about 3.5% compared to last year. This dip is far less severe than the year-over-year drop from 2014 to 2015.
To understand areas of softness and success, Foursquare's data scientists looked at how specific brands and categories will fare. Of course, there are many other factors like online and in-store promotions, unseasonably warm weather and the election year that may impact performance, but we believe our analysis is a strong benchmark from which retailers should be making key holiday-season decisions.
Now more than ever it's important for retailers to understand what to expect from — and how to optimize — the holiday season.
Let's start from the beginning.
The lead-up to the holidays and the fade-out of Black Friday
We looked back to understand how Black Friday shopping has performed over time. We found that what has long been known as the biggest shopping day of the year, well, isn't. In 2015, Black Friday saw a significant decrease in foot traffic compared to the year before; instead of wildly peaking on Black Friday, the shopping season is flattening out a bit, and other days later in the season like Super Saturday are rising in popularity. In 2014, Black Friday was the third most popular shopping day of the year. In 2015, it ranked fifth.
We looked at the activity leading up to Black Friday, particularly from September 1 to October 31, to assess what the holiday season might look like for 2016. The 2016 trendline reveals that this year, retailers have not suffered the same losses leading up to the holidays. Foot traffic in September through October 2016 closely mirrors 2015 (although slightly down). Foursquare predicts that this will hold for Black Friday 2016, and that on whole, U.S. retailers should only expect a 3.5% drop in foot traffic from last year.
While factors like rising wages have contributed to the brighter picture, we knew that certain retail categories will be impacted differently, in specific and unique ways.
Big-Box and Dollar Stores for the Win
In 2015, big-box stores experienced a relatively minor year-over-year dip in foot traffic compared to retail overall, and this year, the category is seeing foot traffic increases. Looking ahead to Black Friday, we expect this category to continue outpacing retail in general and to see an increase in foot traffic of over 5% year-over-year.
Another winning category: Discount stores, such as dollar stores, are gaining in foot traffic compared to last year. Historically, discount stores haven't seen a huge Black Friday boost, but they do gain momentum later on in the season.
Our prediction for fastest growing chains in these categories (looking at year-over-year foot traffic performance for Black Friday): Big Lots will see the largest spike in the big-box category on Black Friday 2016, and Dollar Tree will be the leader for the discount category — with gains that will be even more pronounced closer to Christmas.
Department stores, Put on the glitz!
In fall 2015, the country's top department store chains had a tough season, showing even bigger losses than the retail industry in general. Black Friday didn't close this gap, but it did signal the start of an upward trend. Between Black Friday and Christmas 2015, department store chains regained some lost ground. The gap narrowed between Black Friday and December 24th: basically, a recovery in the holiday blitz.
Looking at this year, we see that September through October foot traffic in department stores was down by 7%: double the drop of retail in general, but a less precipitous drop than we saw in this category in 2015. So while we predict that Black Friday 2016 will be less successful for department stores than for the rest of the retail industry, department stores will make significant gains later in the season and perhaps even pull ahead of 2015 foot traffic numbers.
Which department store chains are going to win Black Friday with the largest year-over-year lift in foot traffic? Marshalls, Dillard's and Macy's; and amongst luxury department stores, Lord & Taylor, Saks Fifth Avenue and Neiman Marcus. All six of these brands have seen stronger foot traffic patterns than their competitors in the past two months and should anticipate strong YOY performance.
Can retailers change their fate?
It's never too late. November and December are critical months for marketers working to win over dollars from otherwise budget-conscious shoppers. Retailers in struggling categories (or even winning ones) can still maximize their impact this holiday season.
Here's how Foursquare can help:
- Retailers can understand foot traffic trends — like the ones that we've presented above — to their stores and their competitors' stores with Place Insights.
- Marketers can identify and reach audiences based on where they go in the real world with Pinpoint. (Want a leg up? Stay tuned: next week we'll reveal data on the top chains where holiday shoppers over-index).
- Advertisers can measure and optimize in real-time how digital ads across any platform drive store visits during the holiday shopping season by using Attribution.
Want to learn more about how Foursquare can help your business? Visit enterprise.foursquare.com or email firstname.lastname@example.org.
Foursquare analyzes foot traffic trails from more than 50 million monthly global users of its Foursquare City Guide and Foursquare Swarm apps and websites, which people use to explore the world and check in. These location-based apps help us understand trends and notable shifts — always anonymously and in the aggregate.
For this study, we analyzed a statistically representative portion of U.S. users. Foursquare normalizes all data against U.S. census data, ensuring that our panel of millions accurately matches the U.S. population to remove any age, gender or geographical bias. Foursquare's proprietary understanding of place shapes and our ability to detect when mobile phones enter or exit over 87 million businesses and places around the world is the foundation of Place Insights, our product for analysts and marketers.
In this analysis, Foursquare's data scientists looked at visits — including both explicit check-ins (from Foursquare Swarm) and passive visits (from both apps) — to all retail stores in the U.S. as well as for specific store categories including department stores, big-box stores and discount stores, within the top 500 U.S. chains, from September through December 2014, 2015 and 2016. We used a rolling 7-day average to eliminate daily spikes and identify clear trends.