Holiday shopping behaviors: Black Friday is losing some of its luster.

It’s the beginning of October – which means that the holiday shopping season will soon be upon us.

… If it isn’t already, based on the holiday displays we’re already seeing cropping up at some major retail chain stores.

Of course, U.S. retailing firms have been gearing up for the season for months now, in terms of building merchandise inventories and so forth. But what sort of consumer shopping dynamics will they be facing this year?

According to new research published by Euclid, Inc. in its 2017 Evolution of Retail report which covers holiday physical and digital retail trends, Cyber Monday has now overtaken all of the other holiday-season shopping days in terms of consumer excitement.

That finding is based on a survey of ~1,500 U.S. consumers age 18 and older. While majorities of respondents report that they are excited about each of the three biggest revenue days of the holidays, for the first time ever Cyber Monday heads the list in terms of consumer interest and excitement:

  • Cyber Monday: ~72% of consumers report being excited about this shopping day
  • Black Friday: ~62%
  • Day after Christmas: ~55%

Clearly, online shopping continues to build momentum year over year. But the Euclid research also reveals that physical stores continue to have a major role in the “buying journey.”  Even among consumers in the 18-34 age group, three out of four respondents report that they visit physical stores on a regular basis to see products “in the flesh” – even if they purchase them online later.

Not surprisingly, “price” remain the biggest driver in consumer shopping behaviors during the holiday season, but convenience is another factor as well. It isn’t simply a store’s location that matters, but also how quickly shoppers can get in and out of the store that affects their views of “convenience.”

Interestingly, when comparing just in-store shopping plans, more respondents in the Euclid survey expect to be shopping on the day after Christmas (63%) than on Black Friday (60%) this year.

Perhaps the decisions by some big retailers to curtail store hours on that traditional first day of the holiday shopping season are being driven by more than simply altruism …

The complete Euclid report for 2017 can be downloaded here.

America’s shopping malls struggle to avoid becoming dinosaurs.

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America’s department store chains – and anchor stores at countless shopping malls across the country – are reporting another rounds of disappointing sales and profit figures following the 2016 holiday season.

It underscores what we’ve been seeing all over the country – dead or dying malls.

In fact, retail industry analyst Jan Rogers Kniffen predicts that about one-third of malls in the United States will shut their doors in the coming years.

That’s about 400 of the ~1,100 enclosed malls.

Equally startling, of the ~700 that remain, all but around 250 are expected to continue to struggle.

The problem is multi-faceted. At an estimated 48 sq. ft. of retail space for every man, woman and child in America, that’s a footprint that gotten too big.

“On an apples-to-apples basis, we have twice as much per-capita retail space than any other place in the world,” Kniffen says, adding that the United States is “the most over-stored” country anywhere.

The oversupply of retail space is challenged by changing customer tastes, too. Online shopping is a huge problem for malls, as is the rising popularity of off-price stores in lieu of the department stores like Macy’s and Penneys that have served as important anchors for mall properties all over the country.

Now we hear reports that Macy’s is planning to close numerous store locations during 2017, joining Sears and Penneys which have been doing the same thing over the past several years.

How will malls survive in the future? Recently, the McKinsey & Co. consulting firm issued a report that highlighted five ways malls can remain relevant to consumers today and in the future:

Mall of America (Bloomington, MN): Expansion Rendering
Mall of America (Bloomington, MN): Expansion Rendering

Entertainment – Even in the age of “interactive everything,” consumers – particularly younger ones – continue to seek out gathering places and “experiences.”  It’s one reason why some shopping malls have had to deal with large numbers of young people flooding their spaces – not always with pleasant results.  Malls seeking out tenants that provide entertainment hubs — such as theme parks and gaming parlors, edutainment, and even virtual-reality content and immersive experiences — will be able to draw customers from a wider geographic area who crave social interaction.

Food and drink – “Food is the new fashion,” some people like to say.  Successful malls are getting on that action, incorporating popular dining options along with unique ones as a way of becoming destination locations.

Retail – Still a core aspect of malls, but with new twists, such as creating retail centers that are also learning zones that bring together consumers, retailers and entertainment.  McKinsey uses the example of a sporting goods store that also includes a fitness studio, or offline showrooms for online retail players.  More reconfigurable spaces that can be used for pop-up stores, special product launches and seasonal offerings are also options with potential.

Transportation – Getting to and from mall properties with ease is growing in importance, and where some creative thinking might go a way towards making some malls more attractive than others.

Technology – The more that malls can create a “seamless chain” between online and on-site shopping, the better their chances are for staying relevant in the new retail environment.  McKinsey posits a number of initiatives, such as creating “virtu-real” formats that provide consumers with a more interactive retail experience through the use of touchscreen navigation portals, virtual fitting rooms, allowing smartphones for e-checkouts, and click-and-collect services to help blend the offline and online shopping experience.

In sum, for shopping malls it means fundamentally rethinking their role — and then adapting their strengths to those of the virtual/interactive world.

If we check back in another five years or so, we should have a pretty good idea which tactics have been successful – and which mall properties, too.

Hopefully, the shopping mall closest to your home won’t look like the one at the top of this article.

Holiday online shopping dynamics: The 2016 season’s results are already coming in.

ohsOne of the neat aspects of online shopping is the ability to learn about consumer behaviors almost in real-time. No waiting around for published reports that are released months after the fact.

Moreover, we can know quite a bit more than simply gross sales figures, including traffic stats.

In fact, we already have extensive information available about consumer online shopping activities in the 2016 holiday season, thanks to data released by firms such as Connexity’s Hitwise division, which measures consumer behaviors across desktop, tablet and smartphone devices.

From Hitwise, we know that its Top 500 retail websites received more than 335 million visits on Thanksgiving Day alone. That averages out to just under 14 million visits per hour … but the time period of 8 pm to 11 pm had more than 50% greater traffic compared to the hourly average for the day.

Amazon.com was among the retailers receiving extensive traffic volume from 8 pm onward – in its case ~25% of its total traffic on Thanksgiving came in those final four hours of the day.

One supposes that after the “big meal,” the “big game” and the “big cleanup,” consumers decided cap off the day by plunking down at their computers or smartphones for some heavy-duty online shopping.

Hitwise found that Black Friday online shopping dynamics were different, with the top retail sites being busiest in the late morning hours, when site visits were around half again larger than Black Friday’s daily hourly average.

As for Cyber Monday, Hitwise found that consumer online shopping dynamics weren’t very much different from any other typical Monday – except that the overall volume (nearly 330 million visits) was substantially higher than the typical Monday volume of ~200 million visits. That, and a slightly greater-than-average share of online shopping happening in the early morning hours of 6, 7 and 8 am.

hwlAs for the persistent belief that Cyber Monday has more people shopping online during their time in the office, Hitwise is not seeing that phenomenon any longer.

Again, not very surprising in that more consumers have 24/7 access to digital devices in 2016 than they did ten or even just five years ago.

The Hitwise report for 2016 includes extensive findings not just on hourly shopping patterns, but also on product searches and key traffic drivers for the major online shopping websites. More data can be found on the Connexity/Hitwise website.

Will consumer spending bring holiday cheer to businesses in 2016?

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.

Online shopping insights: Why is the in-store pick-up option so popular?

With online shopping so popular these days, why are consumers electing to pick up the merchandise they’ve ordered at the store?

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While it isn’t a pervasive practice, a study published recently by consumer analytics firm Connexity/Bizrate Insights finds that more than 30% of online shoppers have used in-store pick-up at least once during the past 12 months.

Even more surprising, perhaps, is that ~13% of respondents reported that they had considered abandoning a purchase because in-store pick-up wasn’t offered as an option.

As it turns out, people choose the in-store pick-up option for four major reasons:

  • To avoid paying shipping charges: ~55% cited
  • For the convenience: ~43%
  • Need to receive the order quickly: ~36%
  • Shopping online to ensure the item is available: ~29%

At first blush, I wouldn’t think that “convenience” means having to drive to a store versus having the product delivered right to the house. But perhaps “convenience” in this sense is related to product availability – avoiding a fruitless trip to the store only to find out after-the-fact that the desired product isn’t in stock.

But the other reasons cited make good sense, too. Everyone understands the desire to save money – if not on the product itself, then by avoiding shipping charges.  And if a quick drive to the store gets you the items compared to waiting a few days for the shipment to arrive, that’s understandable as well.

The Connexity findings underscore how important it is for retailers to align their e-commerce setups to allow for in-store pick-up – especially if the economics don’t allow them to offer a free shipping option. There’s simply too much competition from online-only retailers to afford losing sale to them based on any of the four factors listed above.

Mobile shopping goes majorly mainstream.

untitledFor years, the common perception has been that consumers tend to use their laptops, tablets or mobile devices to research purchases while ultimately visiting a store to make the actual purchase.

And up until now, most studies have shown that no matter what type of digital device consumers use to shop, large majorities prefer to complete the sale in a store or at the mall.

But now a new study is telling us something different. The research, conducted by questioning ~1,000 U.S. consumers by research firm Ipsos, shows that shopping frequency in physical stores hasn’t kept pace with the growth of smartphone shopping.

According to Ipsos, over the past year there has been a significant increase in the amount of smartphone shopping, with two-thirds of respondents reporting that they are doing more of this today:

  • Shopping more frequently via smartphone: ~64%
  • Shopping more frequently via tablet: ~60%
  • Shopping more frequently via desktop computer: ~57%
  • Shopping more frequently via laptop computer: ~57%

At first blush, these figures don’t seem startling at all, considering the rise in the consumer economy over the past year or so.  Moreover, ~41% of the survey’s respondents reported that they haven’t made a significant change in their frequency of shopping in physical stores.

But in considering the ways respondents reported how and where they’ve been shopping less frequently over the past year, the differences appear much more stark:

  • Shopping less frequently via physical store: ~30%
  • Less frequently via desktop computer: ~11%
  • Less frequently via laptop computer: ~11%
  • Less frequently via tablet: ~11%
  • Less frequently via smartphone: ~9%

It even goes further than that. The two groups which seemed most inclined to shop less frequently in physical stores were younger consumers (age 25 and under) as well as consumers who earn more than $100,000 per year.

Add to this the propensity for younger consumers to be using smartphones and tablets more often than their older counterparts, and it’s clear that some of the most prized demographic categories are migrating to smartphone shopping in a big way.

The implications for traditional retail could not be more clear:  adapt your business model or else.

Data breaches: Target is just the tip of the iceberg.

Target data breachI’m sure we aren’t the only family who’s had to suffer through the aftershocks of Target’s infamous Great Thanksgiving Weekend Data Breach that occurred in late 2013.

According to news reports, as many as 40 million Target credit cards were exposed to fraud by the data breach.  And as it turns out, the initial reports of nefarious doings were just the beginning.

Even after being given a new credit card number, my family has had to endure seemingly endless rounds of “collateral damage” for more than a year since, as Target’s very skittish credit card unit staff members have placed card-holds at the drop of a hat … initiated phone calls to us at all hours of the day … and asked for confirmations (and reconfirmations) of merchandise charges.

Often, these unwelcome communications have occurred on out-of-town trips or whenever someone in the family has attempted to make an innocuous online purchase from a vendor based overseas.

It’s been altogether rather icky — in addition to being a royal pain in the you-know-where.

But our experience has hardly been unique.  Consider these scary figures when it comes to data breaches that are happening with businesses:

  • On average, it takes nearly 100 days to detect a data breach at financial firms. 
  • It takes nearly 200 days to do so at retail establishments.

Those unwelcome stats come to us courtesy of a multi-country survey of ~1,500 IT professionals in the retail and financial sectors.  The study was conducted by the Ponemon Institute on behalf of network security and software firm Arbor Networks.

The next piece of unsettling news is that, even with the long “dwell” times of these data breaches, the IT professionals surveyed aren’t optimistic at all that the situation will improve over the coming year.  (Nearly 60% of those working in the financial sector aren’t optimistic, as do a whopping ~70% in retail.)

It’s doubly concerning because companies in these sectors are such obvious targets for hack attacks.  The reason is simple:  The amount and degree of customer data stored by companies in these sectors is highly valuable on the black market — thereby commanding high prices.

It makes it all the more lucrative for unscrupulous people to make relentless attempts to hack into the systems and extract whatever data they can.  IT respondents at ~83% of the financial companies reported that they suffer more than 50 such attacks in a given month, as do respondents at ~44% of the retail firms.

The impact on companies isn’t trivial, either.  Another study released jointly just last week by Ponemon and IBM, based on an evaluation of ~350 companies worldwide, finds that the average data breach costs nearly $160 for each lost or stolen record.  And that’s up over 6% from a year ago.  (The Target breach cost substantially more on a per-record basis, incidentally.  And for healthcare organizations, the average cost is well over $350 per record.)

dbWhat can be done to stem the endless flood of data breach attacks?  The respondents to this survey put the most faith in technology that monitors networks and traffic to stop or at least minimize these so-called advanced persistent threats (APTs).  More companies have been implementing formalized incident response procedures, too.

As Dr. Larry Ponemon, chairman of the Ponemon Institute has stated, “The time to detect an advanced threat is far too long; attackers are getting in and staying long enough that the damage caused is often irreparable.”

Clearly, more investment in security tools and operations would be advisable.

Anyone else care to weigh in with opinions?