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Shopping for Christmas 2016: Retail Prospects

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Shopping for Christmas 2016: Retail Prospects Shopping for Christmas 2016: Retail Prospects ~ A Research Report for VoucherCodes.co.uk, part of RetailMeNot Report Prepared by Centre for Retail Research Limited, Nottingham September 2016 Research Report Shopping for Christmas 2016 Shopping for Christmas 2016: Retail Prospects ~ A Research Report for VoucherCodes.co.uk, part of RetailMeNot Executive Brief Report. This independent report into the prospects for Holiday or Christmas shopping in 2016 has been commissioned by RetailMeNot, the world’s leading marketplace of digital offers, and carried out by the Centre for Retail Research based in Nottingham, England. Spending on shopping by consumers in the final weeks before Christmas is vital to most retailers’ profitability and many achieve 20% or more of their annual sales in this period. This is only so because, irrespective of background, the Holiday festivities, including celebrations and gift-giving, are an important and traditional part of social and family life. Shopping for Christmas 2016, considers the Holiday/Christmas prospects for retailers and consumers in nine important countries: Belgium, France, Germany, Italy, The Netherlands, Spain, UK, the U.S.A. and Canada. Their combined populations are 699.2 million. We estimate that Christmas spending this year will be: £280.991 bn (€323.895 bn) in Europe; £492.246 bn ($635.96 bn) in the U.S.; and £38.470 bn ($49.84 bn) in Canada. The 2016 report has taken account of major shifts in exchange rates and both the 2015 and the 2016 figures are based on current rates of exchange. This is to ensure that changes given in the report reflect only changes in the retail sector, and not currency movements. This does however mean that our figures are not comparable with last year’s figures. Billion. Reflecting international use the term ‘billion’ means here one thousand million or 109. Christmas. ‘Christmas’ and ‘Holiday’ are used interchangeably reflecting differences in usage patterns in North America and Europe. The ‘Holiday period’ in this report covers the six weeks of retail trading that normally starts in mid-November and continues to the end of December. For comparative purposes, we use the same yardstick in every country and therefore count U.S. retail spending from mid-November. Methods. The Centre has carried out international research into Christmas spending for more than 15 years. Shopping patterns vary widely. For this study, we have drawn on published data from government statistical agencies, national economic/finance departments, consultancies, analysts and research groups. Telephone interviews with 50 major retailers have been carried out in each country and consumer interviews with 1,000 shoppers each in the U.S., the UK and Germany in order to gauge their likely intentions. The surveys were carried out in August- September 2016. Consumer attitudes can change because of political, geo-political, economic and local issues that can either improve expectations or worsen them. Where this is likely to have an effect we have noted this in the report. Forecast. We forecast that Christmas spending in the final six weeks of this year will rise by 1.6% (1.8% in 2015) compared to last year or £280.991 (€323.895 billion) in Europe, and by 2.2% (2.9% in 2015) to £492.246 bn ($635.96 bn) in the U.S. Consumers in all countries have been affected by the relative slowdown in the global economy and the uncertain outlook, which explains the lower forecast growth for Christmas 2016 2 Research Report Shopping for Christmas 2016 Online Christmas Spending. The online share of retail spending normally rises in the Holiday period in most countries, because a greater part of holiday spending is non-food and it is discretionary spending (non-food generally has a higher online share than food). Doing Holiday shopping on the internet may be regarded as more convenient, cheaper, and, for inexpert consumers buying products for others, it may be more accurate and less trouble to buy goods online rather than visit stores. On average we expect that the growth in online Christmas spending (as opposed to sales made in physical stores) will be lower than the previous two years, 15.0% in Europe and 11.8% in the U.S.. Total online sales are expected to be £52.95 bn (€61,01 bn) in Europe and £112.74 bn ($146.10 bn) in the U.S.. The strongest growth is likely in Spain, Italy and Canada where ecommerce currently has smaller market shares. These figures include cross-border trade. The average market share of online retailers at Christmas, both pure-play specialists and the websites of store-based ‘multichannel’ retailers, is forecast to rise from an average of 13.9% in Europe to 18.8% in 2016 and from 20.9% to 22.9% in the U.S. Countries with the largest online market shares in Europe are the UK (27.0%), Germany (21.0%) and France (16.3%). Note that these figures exclude automobile fuel, vehicle sales, and the sales of restaurants, cafes and hot food. This means that online retailing is growing faster than all-retail sales, causing sales in physical stores to fall slightly in every country except Canada. The average drop in sales in Europe was - 1.0% and -0.3% in the U.S. Cross-border purchases. Online cross-border transactions for Christmas (defined as purchases by consumers from foreign websites or stores) are estimated to grow in Europe from 5.3% of online Christmas sales (total, £2,459 mn [€2,833 mn]) in 2015 to 6.0% in 2016 (£3,156 mn [€3,638 mn]), an increase of 28.4%. European countries with the highest rate of cross-border trade in Christmas 2016 are expected to be The Netherlands (17.4%), Belgium (9.8%) and Germany (8.0%). Canadian consumers purchased 8.6% of their online requirements from other countries, mostly the U.S.. mCommerce Growth. Mobile eCommerce (mCommerce) is increasing its share of online sales, reflecting both the increased availability of smartphones and tablets and the efforts of hitherto store-based retailers to create multi-channel or omnichannel systems to allow consumers to research, browse, compare and purchase in multiple ways. Mobile transactions are expected to grow from 25.6% (£13.56 bn [€15.64 bn]) of online European retail sales to 37.5% (£21.37 bn [€24.63 bn]) in 2016, an increase of 57.5%. In the U.S., mobile will expand from 33.6% (£33.88 bn [$43.91 bn in 2015) to 43.9% (£49.49 bn [$64.14 bn), a rise of 46.1%. The highest mobile shares in Christmas spending are forecast to be in the U.S. (43.9%), Germany (43.1%) and the UK (42.3%). Tablets are expected to achieve a European mean by country of 43.2% of mCommerce trade this Christmas in Europe and 43.7% in the U.S. Tablets are increasingly used when buying apparel, homewares, furniture and computer hardware, but smartphones for entertainment, films and books. They are more likely to be used at home or travelling and are increasingly seen as substitutes for desktop PCs and laptops. The introduction of mini-tablets and large-screen smartphones indicates that functional convergence may reduce the distinctions between tablets and smartphones. Christmas Spending per Household. Average household (family) spending is forecast to rise to £540.42 (€622.57) in Europe (£531.26 [€612.00] in 2015) and £1,022.86 ($1,325.62) in the U.S. 3 Research Report Shopping for Christmas 2016 (last year, £1,000.84 ($1,296.86). In Europe this spending consisted of: gifts - £305.00 (€351.96); food and drink - £169.21 (€194.93); decorations - £19.14 (€22.05); and holiday-related travel £47.07 (€54.23). As before, U.S. households (£1,022.86 [$1,325.62] per household) outspent those of other countries, followed by Canada (£859.81 [$1,114.86]), the UK (£809.97) and Germany (£616.54 [€710.38]). Holiday Gift Spending per Person. Spending on gifts per person is expected to rise to £157.82 (€182.01) in Europe (£154.64 [€178.80] last year). The figures vary greatly by country, with the UK at £240.41, the U.S. £212.95 ($276.01) and Canada £211.88 ($256.41). Once again, these are averages of spending by the entire population and not simply by members of households with adolescent children. Gifts of money, vouchers, gift cards/token, and cheques represented 9.6% of all gifts in Europe. Key areas of spending in Europe are: clothing and footwear, 23.9%; toys, 19.6%; and consumer electronics, 19.0%. Other categories were: cosmetics, 8.9%; books, films entertainment, 7.1%; jewellery, 7.1%; confectionary and alcohol (as a gift), 4.6%; and other, 0.2%. Key Dates for Christmas Shopping. Online retailing and bricks and mortar retailing have different trading peaks as a result of traditions, logistics and marketing considerations. Individual countries can have different trading peaks, for example in The Netherlands when Christmas gifts for children are purchased on S. Nicholas’ Eve, 5 December, rather than later in the December month which is more usual elsewhere. - Key dates Online shopping. Cyber Monday falls this year on 28 November, which is well before any practical deadline for online deliveries. Cyber Monday is the key online date in the U.S. ($3.48 bn [£2.66 bn] sales forecast) and Canada (Can$147 mn forecast), as well as Cyber Monday in the UK (£1,157 mn [€1,333 mn] in 2016) and by Cyber Sunday in France (€250 mn [190 mn]). The U.S. Black Friday long weekend including Cyber Monday should produce total sales $8.514 bn (€7.567 bn].
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