US shoppers hit department stores on Thanksgiving evening and spent $1.75 billion online by 5 p.m. ET as a strong economy and rising wages drove a solid start to the holiday selling season.
While large crowds were absent in many locations on Thursday evening, it was not as bad as 2015 and 2016 when shoppers largely stayed away from stores on Thanksgiving and Black Friday, according to retail analysts and consultants.
Smartphone sales lifted overall online spending by 28.6 percent by Thursday evening from a year ago, according to Adobe Analytics, which tracked 80 of the top 100 US online retailers including Walmart and Amazon.com Inc.
"Thanksgiving is on track to be a blowout day ... fastest growing day that we have ever seen in terms of major shopping holidays online," said Taylor Schreiner, director at Adobe Digital Insights, the research arm of Adobe Systems.
Consumers in San Francisco led the rest of the country with over 2.3 million online transactions, followed by over 954,000 in New York City, more than 415,000 in Dallas and 389,000 in Houston by 10.30 pm ET, according to payments processor First Data Corp, which collects data from about 1 million US merchants.
Electronics retailers such as Best Buy Co Inc saw the most number of transactions followed by department stores such as Macy's Inc, according to the data.
Traditionally, the day after Thanksgiving, or Black Friday, kicks off the holiday shopping season in the United States. But with US stores now opening on Thanksgiving evening, the typical rush seen on the morning of Black Friday has split up.
"Traffic is building up and in many places is on par with last year," said Craig Johnson, president of retail consultancy Customer Growth Partners, who was visiting stores in Connecticut.
"It is also quite cold outside in many parts and that is hurting store visits," he said. The retail consultancy has 18 members studying customer traffic in different parts of the country on Thursday.
A bitter, record-breaking cold blanketed much of the Northeast on Thursday, with the week slated to become the coldest fourth week of November in four years
Sarah Perez, a 26-year-old visiting New York City from upstate New York with her husband, did not enjoy the shopping experience at J.C. Penney because of a very long line at the checkout.
"We're never doing it again," Perez said adding she had already done some of her shopping on Amazon before coming out. Another visitor, 19-year old college student Jack Ray from Iowa, said he doesn't normally shop on Thanksgiving but the wait in front of Target from 3.30 pm had been worth it.
"I saved so much money today,” he said pointing to one of his full bags.
On social media, the dominant sentiment remained in favor of online shopping with many identifying themselves as "Cyber Monday people" rather than Black Friday shoppers as they disliked large crowds. Moody's analyst Charlie O'Shea, who was visiting stores in Bucks County, Pennsylvania said a slower start at stores on Thanksgiving and Black Friday was increasingly not indicative of shopper appetite during the season.
"The season is expected to be strong and all signs when it comes to consumer sentiment point to that," he said.
The National Retail Federation forecast US holiday retail sales in November and December will increase between 4.3 and 4.8 percent over 2017 for a total of $717.45 billion to $720.89 billion. That compares with an average annual increase of 3.9 percent over the past five years.
Overall, 2018 holiday sales will reach a record $701 billion, led by e-commerce and consumer electronics, according to retail research firm Customer Growth Partners.
Amazon is offering free shipping with no purchase minimum for the first time this holiday season. while Target Corp is providing free two-day shipping on hundreds of thousands of items until Dec. 22. Walmart Inc will offer free two-day shipping for a minimum order of $35.About 38 percent of American consumers plan to shop on Black Friday this year, and six in 10 of those shoppers anticipate making at least half of their holiday purchases on that day, a Reuters/Ipsos poll showed last week.