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Holiday Preview Research for Marketers by Marketers Driving analysis, insights and strategic thinking through tools, audience trends and customized quantitative and qualitative primary research. Retail Newsletter Holiday Preview Trying to predict retail sales this holiday season is like picking winning lottery numbers. Depending on who you listen to, we are either in for a robust holiday season, or if we’re lucky, we’ll match last year’s sales. One thing is certain, mobile and online sales will continue to grow and may even account for more than half of all holiday sales. The National Retail Foundation (NRF) is predicting Americans will spend $600 billion dollars this holiday season. Halloween sales are often thought of as a good predictor for holiday sales. This year, Halloween sales were up from last year, partly due to Halloween falling on a Friday. According to the National Retail Federation, total Halloween spending – including candy, costumes and decorations is predicted to reach an astonishing $7.4 billion. This is good news for the retail industry. November 2014 Learn more about Annalect’s research team at annalect.com. This Holiday Online Sales Will Break Records E-commerce sales during the months of November and December will be higher than ever, with over half of shoppers purchasing gifts online. Among those shopping online, 1 in 2 prefer to make purchases on their desktop or laptop computer, 1 in 3 prefer their tablet, and nearly 1 in 5 would rather use their smartphone. Preferred Online Devices for Holiday Gift Purchasing 49% 31% 18% Computer Tablet Smartphone Source: Videology via Statista, 2014 The Price-conscious Holiday Shopper Although many analysts are predicting a strong holiday season, a study from PwC paints a picture of a cautious holiday shopper whose concerns about the economy and rising cost of living are preventing them from shelling out as much as retailers might hope. The report predicts that 2014 will have a similar outcome to 2013, and that spend will actually go down to $684, from $735 in 2013. Those Americans making less than $50K represent 67% of holiday shoppers (up from 63% in 2012) and are obviously more price-driven. Their estimated household holiday spend will be $377. The remaining shoppers are the 33% who make over $50K and will have an estimated average spend of $978. 50% of holiday spending is projected to take place in physical stores, down from 55% in 2013. 43% is projected for online, up slightly from 42% last year. Nielsen reports that multicultural households are much more likely to say they will spend more on holiday gifts, including 17% of African-Americans and 13% of both Hispanic and Asian shoppers. These families are more likely to shop later, along with men and Millennials. One thing is for certain this year: holiday shoppers will be looking for deals. PwC found that nearly all consumers are more price-driven than last year and they are willing to visit multiple stores (or websites) to stretch their dollars as much as possible. NPD Group’s Holiday Purchase Intentions Survey found that ‘special sales price’ and ‘overall value’ will be the top drivers, followed by ‘convenient location’. The group also found that there is a growing holiday trend to buy less expensive products (but more of them), driven largely by Millennials. © Annalect 2014 Holiday Preview | November 2014 3 ‘Christmas Creep’ Becomes ‘Black Friday Creep’ Retailers couldn’t wait for Halloween to be over so they could start promoting their Black Friday specials. This year, Amazon and Walmart started their Black Friday promotions on November 1st, nearly an entire month earlier than in years past. Target announced its earliest ever Black Friday sale, with plans to open doors at 6pm on Thanksgiving Day, in an aggressive attempt to boost holiday sales after a year of disappointing earnings, store closures, and data breach backlash. JCPenney, Macy’s, Kohl’s and Sears have also pushed their Black Friday openings earlier, while retailers like Costco, Lowe’s, Home Depot, and Nordstrom have vowed to remain closed on Thanksgiving, responding to a growing concern among some consumers about the erosion of the family holiday. Still, many shoppers are getting a head start; more than half of consumers surveyed by Ipsos said they’ll start their research before Thanksgiving, with one in four starting before Halloween. Due to the widespread use of mobile devices, shoppers are consulting more sources before making a purchase. In 2010, shoppers used an average of five sources of information before purchasing holiday gifts, but that has more than doubled, with shoppers consulting at least 12 sources last year. This Thanksgiving, Americans won’t let the parade interfere with their shopping - half of all shoppers plan to search, showroom, and purchase on Thanksgiving morning. As for Black Friday shoppers, 80% will visit mass merchandisers, while 68% will visit department stores. About one- fifth of all holiday spend will take place between October and just before Black Friday, with another one-fifth of spend occurring Black Friday weekend. © Annalect 2014 Holiday Preview | November 2014 4 Most Popular Wishlist Categories Everyday Gift Traditional Personal Media & Clothing Cards Toys Electronics Entertainment What’s Hot This Season? According to PwC, these five categories are at the core of the holiday 2014 wish list: everyday clothing (61%), gift cards (58%), traditional toys (39%), personal electronics (36%), and media and entertainment (31%). U.S. consumers are expected to spend $33.8 billion on electronics this holiday season, the highest level since the Consumer Electronics Association began tracking data in 1994. Tablets were the top item the organization reported on its ‘technology wish list’, followed by notebooks or laptops, TVs, smartphones, and gaming consoles. Apple rolled out new 1 1 www.sfgate.com models of its iPad tablet in October, just in time for year-end shopping. The launch of the iPhone 6 has been largely successful, leading Apple to predict a stronger holiday season than analysts expected - an optimism which is expected to further fuel iPhone sales. iPad sales, however, are down 13% from Q3 2013. Apple hopes to find more growth there in a new 2 2 San Jose Mercury News partnership with IBM, focusing on selling iPads to businesses. After an unexpected shortage of Frozen merchandise over the past year, retailers have announced that they have restocked toys and accessories from the most successful animated film of all time. Hot gifts include a boom box that plays the film’s wildly popular soundtrack and dolls modeled after characters, especially “Elsa”. Awareness of wearable fitness devices among U.S. consumers has more than doubled in less than a year, from 30% last November to 70% in July, according to NPD. This increased awareness will help shape a strong holiday season when activity trackers are expected to be a hot-selling item, as new devices hit the market and older devices drop in price. A Futuresource Consulting study anticipates that 39% of this year’s wearable tech activity will be in Q4, in line for the holiday. Meanwhile, further growth is expected in 2015 as smartwatches become more widely adopted, with a 44% growth rate driving the market to 74 million units shipped next year. © Annalect 2014 Holiday Preview | November 2014 5 Record Breaking E-commerce Holiday Sales US online retail sales during the months of November and December will be higher than ever, with over half of shoppers doing at least some buying online. Forrester predicts that the online channel will generate $89 billion during that time, a 13% growth over 2013. Sales from mobile devices and via social networks are expected to be a boon to e-commerce profits this season, as consumers become more comfortable shopping on their smartphones or from social networks. 36% of shoppers surveyed by The E-Tailing Group intend to purchase gifts from their mobile device this holiday season - up 29% from 2013. The study also found that social sites and recommendations will have a greater influence on gift purchases than ever before. One in three shoppers have made a purchase via social in the last year, while 42% will pin items on Pinterest this season. Millennials, unsurprisingly, are especially likely to shop from their mobile devices. They are split on whether they prefer in-browser or in-app shopping, but the great majority have no patience for a page that is slow to load – five seconds is the threshold. Providing clear images of merchandise is especially important to female Millennial shoppers. The other top frustrations of their mobile shopping experience is a slow 3 3 InStart Research checkout and a lack of interactive features. Consumers Use of Mobile Device Before Holiday Shopping 32% 31% 27% 25% 22% Price Research Research Look for Make a Comparisons Gift Ideas Product Reviews Sales Shopping List © Annalect 2014 Holiday Preview | November 2014 6 The Future of Shopping: It’s All About Location Beacons, the location-based technology that track shoppers in-store and reaches them with deals or product information on their smartphone, have shaken up the purchase process and retailers are hoping will boost holiday sales. Retailers in a variety of industries are using beacons to reach consumers in new ways. Retail stores are the biggest beacon users at this point, but businesses like hotels and sports arenas have also jumped on board. Shopkick, an app with its own beacon system, reported that it has driven more than 50 million walk-ins to stores and 100 million product scans. This has translated to $500 million for its retailers in the last year, and more than $1 billion since launching in 2010. The brand recently won a commitment from Macy’s to install their beacons in all of its stores nationwide.
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