Earlier this year, predictions were made left and right about how the holiday shopping season will fare for retailers. Now that we’re right in the midst of the season (which arguably started as early as October), year-over-year holiday spending growth forecasts appear higher than initial predictions made in August—which expected a 3.1% rise in holiday sales.
Here’s a snapshot of what the year-over-year holiday sales growth predictions look like now:
While these favorable projections assure retailers of positive sales growth throughout the season, how they stand out against the competition to grab a slice of their customer’s holiday shopping spend will be the true driver for such growth.
That being said, a few insights supporting each of these predictions to understand what consumers are looking for this holiday season is well worth the read:
A notable takeaway from this report—which surveyed 2,706 US consumers online—reveals how physical stores are still critical for retailers, considering about 40% of consumers surveyed plan to shop at more than six stores during the holidays. There’s something about the holiday shopping experience that people love, and, frankly, crave during this time of year:
“Many of the consumers we surveyed consider the retail center atmosphere—lights, music, decoration—to be the most fun thing about shopping for the holidays.” - JLL
Not surprisingly, a majority of consumers (76%) looking for this experience plan to visit stores:
Additionally, the average budget a consumer will set aside for gifts this season is approximately $740, plus another $150 for holiday décor. Obviously, this can vary by income level—in fact, a higher income shopper will typically spend 3x as much as a lower income shopper.
As for NRF’s predictions, the expected percentage of holiday sales should account for a total of $678.75-$682 billion. NRF does an excellent job of providing a historical framework around this prediction to get a better sense of how holiday sales growth has been trending over the past couple of years:
Holiday sales for 2016 accounted for about $655.8 billion. Let’s look at how a few different types of retailers contributed to this total:
- Clothing stores accounted for about $40.7 billion in holiday sales (slightly higher than $40.1 billion in 2015)
- Department stores for about $36.7 billion (a decrease compared to $40.2 billion in 2015)
- Discount department stores for $22.1 billion (whereas they accounted for $24.2 billion in 2015)
Furthermore, jewelry store holiday sales ($9.4 billion) accounted for the largest percentage (28.6%) of their total annual sales ($32.9 billion) when compared to other retailers in 2016. Department stores came in second (holiday sales accounted for about 23.7% of their total annual sales). This relationship between holiday sales and total annual sales for different retailers only reiterates how crucial this time of year is for most.
I’m curious to see how 2017 plays out in comparison, but you can definitely gain some insights from this historical view of the holiday sales breakdown.
Deloitte’s findings provide a ton of interesting insights, specifically why people may be spending more (or less) this holiday season.
According to their holiday survey, those who plan on opting out of the holiday shopping spending frenzy are doing so because they plan on saving:
I guess some people are stashing away their checks this year, despite the fact savings rates hit the lowest pace in nearly ten years a couple of months ago.
On the other hand, consumer confidence is at an all-time high, as improved household finances factor into one of the biggest reasons for holiday spending among some.
The numbers don’t lie:
“While shoppers may aspire to be less consumed by consumerism, the numbers tell a different story—namely, that the lure of shopping, with its own type of experience, is likely to remain in high demand. All of this likely bodes well for retailers that can provide a differentiated shopping experience along with unique products, an assortment of in-demand merchandise, and a variety of shipping options.” - Deloitte
Based on Deloitte’s findings, this year’s holiday shoppers plan to buy 15 gifts this holiday season and spend an estimated $228 more per household than last year.
One key thing to note is that the holiday sales don’t just include gifts purchased either—it looks like non-gift spending is expected to account for almost two-thirds (65%) of the average holiday budget this year. Consumers surveyed would rather spend on experiences (socializing, travel, sport or entertainment events), which would account for about 39% of the average holiday budget. Another 29% will be spent on holiday essentials like clothing or furniture.
It’s clear that the shopper experience will be the primary driver among retailers to hit these projected holiday sales. The best way to do so will be to make sure retailers have exactly what their shoppers are looking for (or something they may not have known they were looking for).
Based on these predictions, retailers can’t afford to miss an opportunity, and they must make an effort to ensure stores are stocked with the right inventory for the holiday shopper.
Consumers are already seeking out these holiday shopping experiences, as we mentioned before, so it’s up to retailers to deliver on what consumers want in order to gain the most out of the season.