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With the retail industry gearing up to tackle the sharp end of this year’s holiday shopping season, it’s time to reflect on the trends that may be seen in the 2017 shopping period. In Western markets, this period covers the Christmas and New Year celebrations as well as Hannukah. In the US it also includes the Thanksgiving period.
Asian retailers will also have events such as Singles’ Day on 11 November and Fukubukuro, Japan’s lucky dip shopping event, but we won’t tackle these here.
In mature Western markets such as the US, the Holiday shopping season accounts for more than a quarter of total annual sales.
In the US, it’s thought that retail spend could increase by up to 4.5% over this period in 2017 – that’s according to Deloitte’s annual holiday forecast. This study of over 5,000 US shoppers took place in September 2017, just before the last retail quarter got going.
US shoppers are slightly less likely to shop at discount outlets compared to just last year – possibly a sign of growing economic confidence. There’s also a decline in interest in traditional department stores, with internet stores gaining attention.
Younger and higher income shoppers are likely to do the highest proportion of their shopping online, but overall people plan to spend at least half their seasonal budget online.
Where consumers say they aren’t planning to shop online, the reason they plan to buy in-store is that this gives them the opportunity to interact with the product – or to avoid shipping costs. For most online shoppers, the key reason to buy online is convenience – but free shipping is also very appealing.
‘Omnishopping’ (researching in one channel and buying in another) is a key trend, with 90% of UK shoppers expected to use this method according to research by Criteo.
Although smartphone use is higher than ever before, desktop and laptop are still the key devices for online shopping. In fact, there’s a 75% chance of a desktop or laptop visit being converted into a sale. The conversion rate is lower on smartphone, at 59%, but smartphones are in wide use for browsing and researching intended purchases.
Perhaps surprisingly, gifts aren’t the main household expense for the Holiday period. Only around a third of the season’s spending is devoted to present-buying for others.
The bulk of the additional household spending is on things such as clothing bought for the buyer to wear themselves, on entertaining and socialising. There’s also some additional spend on home furnishings around this period.
In the UK, inflation and uncertainty about the house price market may dampen consumer spending on furniture and other household items.
Over the last ten years, the number of gifts consumer say they intend to buy has decreased. The emphasis is now on experiences rather than possessions – a trend that’s already been seen in Millennial consumers. Around a quarter of consumers say they prefer to offer experiences rather than buy gifts.
This might include hosting parties or taking people out to dinner. Since around 2011, consumers have purchased around 15 gifts for the season.
Retails should take note that shoppers are open to the idea of buying things for themselves whilst shopping for gifts for other people. In fact, this trend has become more evident in recent years.
With more than half of consumers saying they plan to shop online, that’s big news for retailers who will no doubt want to give them plenty of opportunities to treat themselves as they shop for others.
Retailers need to be aware, if they aren’t already, that consumers value free shipping. In fact, it’s even more important to them than fast shipping.
Despite the fact that consumers are increasingly being offered next or same-day delivery by retailers such as Amazon, consumers are still fairly reasonable in their expectations for delivery speed. Only 7% expect next day delivery and the bulk of consumers expect delivery within 2-4 days.
What’s noticeable though is that consumers expect to be able to get free delivery after 17th December and still get their goods in time for Christmas – and they don’t really expect to have to pay any more for this late shipping.
That’s a tall order for retailers at the busiest time of the year, and expectations may need to be carefully managed. Shoppers will consider collection in-store if it’s going to be a faster way to get their items without paying shipping charges.
Consumers also take an interest in easy returns and price matching policies. They particularly value having the option to return an item to any store, whether they purchased it from the same location or not. Flexible refund options, such as cash refund or store credit, are popular, as are lengthy return windows.
Continuing a frustrating trend that’s emerged in recent years, many shoppers are motivated only by deals and won’t shop unless there are sales on. Many consumers continue to wait for sales to come around before they will start shopping.
In both the US and UK, shoppers claim to have lost interest in Black Friday retail sales, which seems to correspond with lower numbers of shoppers spending over the sales periods. Some retailers are opting out altogether.
Marks and Spencer had a good last quarter of 2016 despite shunning this pre-Christmas sales frenzy. But the Black Friday event is now huge in the UK and it’s thought this could still be a big shopping event in this market.
There remains economic uncertainty in Brexit-hit Britain, but there are signs of confidence in the US this holiday season. Perhaps some of the broadest trends relate to longer-term changes in the marketplace, such as established retailers struggling to engage with Millennials and the move from in-store to online retail.
Consumer interest in spending on experiences rather than possessions is also a huge trend impacting retail. In an increasingly competitive retail landscape, it’s getting harder and harder to emerge victorious from the demanding holiday shopping season. It remains to be seen what the real trends will be – we’ll report back at the end of the 2017 period.