Holiday Spending

Will consumer spending bring holiday cheer to businesses in 2016?

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Marketing Research, Sales, Social Commentary , , , , , , , , ,

hdsThe holiday season isn’t yet upon us, and already there are a plethora of prognostications being made as to how holiday sales will stack up compared to prior years.

These predictions come courtesy of numerous forecasters including the National Retail Foundation, Deloitte, Kantar Media, eMarketer, the International Council of Shopping Centers, Market Track and others.

So what’s in store? On balance, forecasters predict that holiday sales in the United States will post an increase of approximately 3.5%.  That’s higher than the 10-year rolling average of 2.5% but down a tick from last year’s 3.7% increase.

Still, at more than $655 billion in total sales, holiday spending continues to be the biggest single driver of the U.S. consumer market.

Hardly surprising, e-commerce sales are expected to continue their double-digit growth over last year’s holiday season, with various predictions ranging from 14% to 17% growth in this sector. Not only are consumers attracted by the convenience of online shopping, many of them believe they can find products at the cheapest price via online sources rather than taking a trip to the shopping mall.

Another factor that drives at least some people to shop on their online devices is their aversion to the crush of holiday shopping at the stores. A McKinsey study has found that nearly one-third of U.S. consumers basically hate Black Friday (the day after Thanksgiving), and make it a point to stay as far away from it as possible.

But there’s one drawback for businesses about online holiday shopper dynamics, however:  Those consumers tend to be less brand loyal than is typical. RJ Metrics calculates that the typical e-commerce business acquires nearly 25% of its new customers during just the months of November and December.  Tempering that healthy statistic is the lifetime value of those consumers, which RJ Metric has determined is about 13% lower than the lifetime value of customers acquired at other times of the year.

You might be wondering what amount of money the typical U.S. consumer will spend on his or her holiday shopping this year. Wait for it:  The 2015 per capita amount is expected to be $935.

That figure may seem quite rich … but it’s actually a little bit lower than 2015’s average spend-per-person, which at $953 happens to have been the all-time high ever recorded.

Does the new $935 forecast signify a reversal of a trend … or is it just a pause in an otherwise ever-increasing amount of money that consumers are willing to plunk down as part of their celebration of the holiday season?

Check back in about a year and we should have an answer.

Will there be holiday cheer in retail sales this season?

Phillip Nones Business, Economics, Uncategorized , , , , , , , , , , , ,

Holiday Shopping ForecastHere’s a statistic that surprises no one, probably:  As of November 1st, more than one in five U.S. consumers had already begun their holiday season shopping.

Considering that many merchants begin pushing online and in-store holiday sales in October, it’s hardly any wonder.

In fact, marketing firm IgnitionOne is predicting that American consumers will spend 11% more during Thanksgiving weekend than they did last year.

Some of the increase is undoubtedly due to the calendar; Thanksgiving weekend is nearly a full week later than it was in 2012.

And other forecasting data don’t presage a big jump in holiday sales this year.

According to the National Retail Federation, sales are expected to be “not too hot … not too cold” – up a tad from 2012 but not at the growth level witnessed in 2010 and 2011:

  • 2009:  0.5% sales increase over previous year
  • 2010:  5.3% increase
  • 2011:  5.1% increase
  • 2012:  3.5% increase
  • 2013 (forecast):  3.9% increase to $602 billion

Clues to the reasons behind the middling sales growth forecast can be found in Nielsen’s Holiday Spending Forecast report, in which American consumers describe their financial circumstances in these terms:

  • Two-thirds still feel like they’re in a recession.
  • Half are limited to spending funds on only the basics.
  • One in five has no spare cash at all.

How this translates to the amount of dollars consumers expect to spend on their holiday shopping breaks down as follows:

  • ~44% will spend less than $250 this season
  • ~30% will spend between $250 and $500
  • ~20% will spend between $500 and $1,000
  • ~6% will spend more than $1,000

As in years past, the most popular gift item promises to be … gift cards.  Technology products, toys, food and apparel round out the “top five” holiday gifts.  This is little changed from last year.

And here’s one other stat that retail establishments must be looking at:  Mobile commerce sales grew by ~16% during the holiday season between 2011 and 2012, and ~18% of shoppers checked out deals on their mobile devices.

Those percentages are bound to increase this year.

More findings from Nielsen’s 2013 Holiday Spending Forecast study can be found here.

Even with endless gift choices available online … gift cards reign supreme.

Phillip Nones Uncategorized , , , , , , , ,

Gift cards are bigger than ever in holiday season 2011
Gift cards are forecast to be bigger than ever in holiday season 2011.
The growth of online shopping has been well-documented, and this holiday season is no exception.

And why not? Online shopping so convenient and cost-effective.

Shopping online gives people the flexibility to shop from wherever they are, without having to spend money on transportation. They can shop at all hours of the day or night. Merchandise price comparisons between sites are easy to do. And in many cases, consumers won’t have to pay any sales taxes or shipping charges.

Tack on free gift notes and even free gift-wrapping at many sites, and you have to wonder why anyone would bother to shop for gifts any other way.

In an environment where shopping has become so easy, convenient and cost-effective – and with basically endless merchandise choices – you might figure that holiday shoppers would be finding and buying “just the right gift” for family members or friends.

And so what’s “just the right gift”? Gift cards – to the tune of $28 billion, according to the National Retail Federation’s Holiday Consumer Intentions & Actions Survey, which queried more than 8,500 consumers in early November.

It’s not just that gift cards are the easiest possible gift to buy, with basicaly zero thought going into the purchase. It turns out they’re also the most requested holiday gift on people’s wish lists. (Prior NRF surveys going back five years have found that to be the case, too.)

The 2011 holiday intentions survey found that gift cards are on track to eclipse last year’s performance:

More people plan to purchase gift cards this season (~80% versus ~77% in 2010)

 The average gift card amount will be higher (~$43 vs. ~$41)

The average total spend on all gift cards is predicted to be ~$155 per purchaser. The survey also found that men tend to spend more on gift cards than women.

Speaking for myself, I’m not at all surprised by that last finding. I think I fit the profile pretty well: After “one too many” gift returns made by my wife and daughters, I resorted to gift cards a few years ago and have never looked back.

Holiday Consumer Spending Forecast Tracks the Economy: Just Muddling Along

Phillip Nones Uncategorized , , , , , , , , ,

The holiday shopping forecast for 2011 is pretty blah.If anyone was hoping for good news at the end of the year, it’s not coming in the form of increased holiday spending by consumers.

The National Retail Federation’s annual Holiday Consumer Intentions & Actions Survey concludes that holiday shoppers plan to spend an average of just over $700 on holiday gifts and seasonal merchandise.

That’s down slightly from last year’s holiday spending plans, which were closer to $720.

The chart below shows how average holiday spending has mirrored general economic conditions in the country over the past eight years:

 2004: ~$700
 2005: ~$735
 2006: ~$751
 2007: ~$755
 2008: ~$694
 2009: ~$681
 2010: ~$719
 2011: ~$704

After having grown to more than $750 in the 2006/07 period, a significant drop-off was seen in 2008 and 2009. With the recession bottoming out, this was followed by a tidy little jump in holiday spending 2010.

But just like the rest of the economic picture, things have stalled since then – or pulled slightly back.

In another recent survey, Ipsos Public Affairs has found that women are more likely than men to be planning to cut back on their holiday shopping outlays … as are people over age 35 compared to younger adults.

With consumers continuing to watch their wallets, it’s no surprise that many are taking advantage of savings opportunities. In the Ipsos survey, half of all respondents reported that they had used magazine coupons within the previous 30 days, and there was significant usage of online savings vehicles as well:

 Magazine or newspaper coupons: ~50% have used in the past 30 days
 Loyalty cards or in-store promos: ~47% have used
 Printable coupons from the web: ~28% have used
 Online “daily deal” coupons: ~27% have used
 Online coupon codes: ~25% have used

Despite the slightly lower figures for intended holiday spending in 2011, the National Retail Federation’s survey finds that nearly 40% of consumers will have already started their holiday shopping in October. A similar 40% plan to start shopping in November, while the remaining 20% won’t begin their shopping activities until September.

[A slim ~4% represent those procrastinators who don’t plan to start any of their shopping until the last two weeks of December; I think most of us all know at least one person who falls into this rarified category.]

And if you’re wondering how the average shopper plans to allocate his or her holiday spending this year, it comes as little surprise that shopping for gifts for children and other family members represents well over half of the value of planned purchases:

 Gifts for children, parents and other family members: ~$403
 Gifts for friends, co-workers and others: ~$112
 Holiday-related food items: ~$97
 Holiday decorations: ~$47
 Greeting cards: ~$27
 Flowers: ~$18

What about you? Do your holiday shopping plans for 2011 mirror what the NRF survey found?