Key Things Retailers Should Watch this Holiday Season

Overall economy improving, but not for everyone

Depending on whose predictions or studies you read, holiday spending is projected to increase somewhere between 2 to 6 percent in 2017. However higher income households have seen more improvement in their economic situations:

• While self-descriptions of “tight” finances have begun to decrease, when looking at all age groups with household incomes of more than $50,000, only between 17 to 25 percent describe their financial situation as “healthy.”
• According to a PWC survey, consumers with household incomes of more than $60,000 have predicted both a higher overall spend and year-over-year purchasing increase of 3 percent. Compare this to those with incomes less than $60,000 who will only be spending 63 percent of what the higher income households spend AND spend 8 percent less.
• Overall, 66 percent of shoppers who are spending less than $50 on a gift still conduct research on price points, and the same goes for 85 percent of shoppers who are spending between $50 to $100 on a gift.

Thus, know who the consumer of your product will be and tailor your message accordingly. Most importantly, don’t assume they won’t be looking for deals even if they have seen improvement in their financial situations.

E-Commerce Continues to Thrive But Stores Aren’t Going Away

Overall, dollar sales for the year are up 1.4 percent, with online growth driving the majority of the uptick (0.1 percent growth in brick-and-mortar channels, compared to 21.1 percent growth online). And eMarketer predicts that holiday e-commerce will increase 16.6 percent this year compared to 14.3 percent last year.

However, this does not mean brick-and-mortar holiday retail is going away:

• A full 90 percent of shoppers say they plan to shop at stores this holiday season.
• When we examine a three year difference between U.S. buyers who purchase products digitally, we see essentially no change.in 2014, 53 percent of digital buyers purchased in stores and 52 percent of them plan to in 2017.

Despite the huge advances in e-commerce, there are barriers and benefits to shopping both online and in stores:

• Even with the growth in e-commerce, more than 85 percent of sales are still transacted in-store, proving retailers should continue to focus on providing a good customer experience.
• It is important to acknowledge the continued shift of gift shopping research to digital and in particular mobile channels. More than 80 percent of shoppers use up to 6 channels to find the best holiday details.
• In addition, customers continue to reward retailers who offer the most flexibility for purchase and return options, be it a purchase online picked up in a store or the flexibility to return to a store for an online purchase.

The length of the holiday season will continue to grow and disperse

Holiday retail sales should be helped this year by the length of the season, including 32 days between Thanksgiving and Christmas as well as a weekend for shoppers leading up to Christmas Day. That said, consumers are becoming less fixated on the traditional gift-buying weeks around Thanksgiving.

• More than half of consumers begin research in October or earlier, and less than 20 percent of consumers identify as last-minute shoppers.
• According to a survey by the National Retail Federation, over 70 percent of shoppers said they “no longer feel pressure to snag good deals because [they] know generous promotions would last all season.”
• Those who plan to shop in store on Thanksgiving Day will go down to 30 percent, from 50 percent a year ago.
• Digital shoppers are also continuing to shift their purchasing days around Black Friday. In 2016, Thanksgiving Day saw an increase of 16 percent while Black Friday increased 11 percent and Cyber Monday increased 9 percent.
• Even though research and shopping is starting earlier, some 70 percent of consumers said they won’t finish their shopping until after Black Friday week.

Thus everyone, retailers and consumers alike, are in it for a very long haul. And don’t forget that 15 percent of those who said they’ll finish after Black-Friday week, also won’t finish their shopping until after Christmas Day because they are planning to take advantage of after-Christmas discounts.

Younger generations starting to use visual social media for gift research and ideas

Millennials and Gen Z are finding new ways to shop this holiday season by utilizing social media as the driving force behind their holiday to-do lists. Because these users have grown up in a world with smartphones, wearable technology and social media, they are naturally drawn to these vehicles as a source of information, advice and trends. This becomes even more apparent for Gen Z, who has grown up specifically with visual social networks such as Instagram and Snapchat, which essentially serve as digital catalogs of the hottest gifts this holiday season.

• About 82 percent of Millennials’ holiday shopping is influenced by social media.
• This number increases even more for Gen Z, who bases anywhere from 87–94 percent of their holiday shopping on what they see on social media.
• 45 percent of Young Gen Z (aged 13–16) said their wish lists are influenced by their friends’ wish lists.

If this is a target for your brand, be sure you take advantage of these visual platforms to reach Millennials and Gen Z consumers.

The importance of mobile and convenience of product availability

Mobile in-store searches are up by over 30 percent. Based on a “Think with Google” article, shoppers will buy on their mobile phone as they are in the actual aisles of the store. An estimated 43 percent of mobile shoppers in consumer electronics have purchased products on their phones while looking at those products in the store. It should be as easy as possible to buy something no matter where someone is. Having products conveniently offered virtually everywhere is important to the consumer as well. Additionally, nearly seven in 10 people say it’s important that a retailer offers multiple ways to buy a product, such as buying online or picking up in-store. When it comes to closing the sales loop with consumers as they are purchasing online, shoppers look for free shipping—it was the promotion that shoppers most used last holiday season, more than coupons or discounts.

Consider chatbots to assist in 1:1 customer service

By 2020, 85 percent of customer interactions with a company will be carried out without any human interaction. Consumers are already taking note of these new and improved bots. Approximately 25 percent of U.S. households already use chatbots on a daily basis to conduct basic shopping needs such as asking customer service questions, checking the status of an order and researching products. In fact, 83 percent said they would be more loyal to brands that offer chatbots.

Me, myself and I

Another growing trend: it seems that sometimes consumers just don’t want to wait and hope someone will get them what is on their wish list. More than 70 percent of respondents to an NRF survey said they had bought gifts for themselves during the 2016 holiday season. In a survey by Deloitte, U.S. internet users said they planned to spend 26 percent of their holiday budget on “non-gifts,” which most likely indicate purchases for themselves.

Amazon a product research platform

More people shop on Amazon than any other digital retail site. It’s one of the leading places to begin researching products and set off on a buyer journey. 55 percent of U.S. internet users said Amazon was the first channel they used to research products digitally prior to actual purchasing.

• Amazon Marketing Services (AMS) offers three ad products that are sold on a CPC basis: sponsored products, headline search ads and product display ads. All three formats can link only to pages within Amazon’s retail platform.
• Although Amazon may be a good sales driver, it does have downfalls such as lacking certain common targeting options, like retargeting or geotargeting.

Making “brick” and “click” work together

With the continued rise of e-commerce, more and more brands are turning to showroom-style brick-and-mortar stores to engage with consumers who prefer to shop online but still desire an in-store experience. From clothing brands to furniture stores, showrooms not only decrease overhead costs for companies by eliminating the need for large storefront spaces, reduce the number of required employees and limit the volume of necessary inventory, but also create a completely brand immersive experience for the consumer. Shoppers can gain a better understanding of the full spectrum of products a brand offers by trying a variety of styles in-store and utilizing that experience to purchase products online at that moment or later on. This concept was appealing to 45 percent of consumers, particularly males, surveyed in a recent WD Partners study. Some retailers have even reported sales increases as high as eight times that of their sales before opening showrooms. As consumer behavior continues to evolve, the business model and roles of sales vehicles will also evolve; showrooms are just one of many potential marriages consumers can expect to see between brick and click.