The holiday shopping season has kicked off with slow traffic to physical retail stores, but a surge of buying online by deal-seeking consumers. Total web-based sales for Thanksgiving weekend increased by 26% from a year earlier, said IBM in a report on Monday.
Thanksgiving was the fastest-growing online shopping day over the four-day holiday weekend, with sales rising 25% to a record $1.7 billion, according to Adobe. Adobe also said that Cyber Monday spending may hit a record $3 billion this year.
"We have seen overall solid traffic and conversion so far, but there is a long way to go," said Blue Nile president and CEO Harvey Kanter on the start to the holiday season.
Kanter noted that although people can shop for holiday deals on smartphones at any time, Cyber Monday remains a day where traffic spikes on its site as people seek out juicy discounts.
What looks like a promising start for Blue Nile this holiday season continues a solid year for the company. Net sales rose 4% year over year in the third quarter, while adjusted operating profits rose about 18%. The company benefited from an increase in the number of orders in the U.S., where sales rose 6.8% from the prior year.
One driver of the improved number of orders was strength in engagement sales, which is the heart of Blue Nile's business.
"There is growth in marriage and cohabitating in the U.S., and that continues to bode well for us," said Kanter, adding that the company offers "incredible value that you just can't match anywhere, 40% below traditional jewelry stores."
Consumers wanting to get hitched may be noticing the better prices on engagement rings at Blue Nile relative to its key rival Tiffany (TIF) , where engagement jewelry sales in the U.S. were pressured in the third quarter.
"If you want the blue Tiffany box, you will have to pay for it," said Kanter.
Even as it has invested this year in data analytics to improve the profit margins on its products sold online, Blue Nile has found some money to start mapping out a clever retail store strategy that takes aim at traditional jewelers such as Kay and Jared's, operated by Signet Jewelers (SIG) .
Blue Nile's first retail store, a "Webroom," opened in June of this year at Roosevelt Field Mall in Long Island, New York. Unlike typical jewelry stores, Blue Nile's Webroom carries no inventory for people to buy, only to try on. Then customers are walked through an online order by an associate at its version of Apple's (AAPL) genius bar. By cutting out inventory, Blue Nile is able to keep its costs for the store at bay, and maintain cheaper product prices relative to competitors.
Kanter said, "The Webroom is a bet we have made on the consumer that needs to see, touch and feel -- about 75% of the customers to the store are actually purchasing in the store, and we are also seeing a lift in the entire market as it creates greater awareness of Blue Nile."
According to Kanter, Blue Nile plans to open three to four more stores in the first half of 2016 using the same format.