Abraham Yousef · March 2024
US Shopping App Holiday 2023 Takeaways
The 2023 holidays were a tale of have and have-nots, with many of the discretionary retailers struggling to drive sales amidst a pullback in spending and an ongoing shift to experiences. Per Sensor Tower usage and engagement data, Walmart and Target fared better than Macy’s, Kohl’s and Old Navy, with the latter more heavily and negatively impacted by the growth of Temu and Shein.
Key Takeaways:
Holiday trends were mixed across the retail space with many seeing topline weakness, more due to a still hesitant consumer than extensive promotions
Consequently, consumers have pulled back on spending, per Jan’24 US retail sales, which fell –0.8% MoM (vs. estimated -0.3% drop), while consumer confidence has also declined
Rising inflation drove download growth at both Walmart and Target, up 7% and 8% YoY, respectively, in 2023
On the other hand, department stores and value apparel retailers faced a decline in downloads in 2023, falling 27%, 22%, 20%, 10% and 7% YoY at Nordstrom Rack, Amazon, Old Navy, Macy’s and Kohls, respectively, likely due to consumers’ shift to rapidly growing Chinese e-tailers, in particular Shein and Temu, whose downloads jumped 56% and 861% YoY, respectively
Given that a majority of Amazon’s users are Prime members, it has a stickier user base than most of its retail rivals, while Walmart and Target trail Amazon’s penetration of retained users (~93% in 2023) at an average of 81% in 2023, they are significantly ahead of the remaining cohort
Macy’s, Kohl’s, Shein and Temu had an average penetration rate of retained users at 66% in 2023, nearly 30ppts below Amazon
Retail media networks continue to drive robust high margin growth, contributing significantly to profitability and partially offsetting softness from weaker segments, shrink and other other elevated operating costs. Although Target, for example, has seen a slowdown in mobile app users and comparable store sales, its advertising business (Roundel) has been a fast growing prospect for the company, up 20% YoY in FY23, per the company
Target’s strong growth in its advertising business is largely corroborated by ST data. Per ST retail media network (RMN) data, the top ten categories of advertisers (by total impressions) on Target’s retail media network saw impressions soar an average of 340% YoY in 2023, indicating a material increase in advertising activity on the network throughout the year
For more information, request the full report from reports@sensortower.com.
