PwC: Ten Trends Expected to Drive the Holiday Shopping Season
1. Holiday spending: Is the glass half full or half empty?
Consumers are cautiously optimistic this holiday season with 53% indicating they will likely spend about the same as last year and 32% indicating they will likely spend more than last year.
Of all age groups, young millennials – aged 18 to 24 – indicated they are the most optimistic.
2. Income levels drive survivalists and selectionists
Retailers are dealing with two very different categories of shoppers. Survivalists want the best deals as they simply have not felt the benefit of an economic recovery; consequently, they will likely spend less this holiday season than they did last year, with a preference for gift cards. Selectionists have a distinctive brand appetite and are more likely than others to spend on travel, entertainment, and the latest in personal electronics. They’re avid online shoppers and plan to spend slightly more this holiday season than last year.
Overall, the most popular items this holiday season will likely focus on health and wellness, athletic leisure, and innovative products and will likely fall within the following categories: gift cards, toys, clothes and shoes, accessories, and home electronics.
3. Millennials matter
Millennials (aged 18-34) are the retail prize this holiday season. They are primed to potentially spend $63 billion this holiday season, which would be more than they spent last season. And they crave diverse experiences: 52% of their holiday spending will likely go toward experience-related purchases such as travel and entertainment, versus 39% for older shoppers.
Interestingly, millennials ranked online shopping lower on their list of preferred channels after department stores, mass merchandisers, and specialty stores than older shoppers. This is in keeping with their thirst for experiences as they want to be able to see, touch, and feel the merchandise.
4. Savvy shoppers choose discounts, promotions
All shoppers love a great bargain. In fact, the majority of holiday shoppers surveyed said price is a major factor influencing their holiday shopping decisions. But, there are differences when looking at the survivalists and the selectionists.
Ninety percent of survivalists responded that price is the number one factor influencing their holiday shopping decisions while nearly 60 percent of the high-end of the selectionists indicated quality merchandise as a major factor in their holiday shopping.
Shipping figures prominently in online purchasing decisions: 83% of shoppers said standard free shipping would make them extremely likely to make a purchase. Free returns, both in-store and online, also play a role in shopping decisions with 67% of shoppers wanting to return online purchases in-store.
5. Beyond Black Friday . . . the long reach of the shopping season
All the anticipation around and build-up to Black Friday is less relevant as shoppers are seeking deals earlier in the season. As a result, the ever-expanding holiday shopping season includes late October and the entire month of November; consumers will likely complete more holiday shopping (29%) before the start of Black Friday week than during (26%).
6. The power of brand
Eighty-six percent of consumers will likely only shop brands they trust. Millennials are twice as likely to shop brand leaders as older shoppers, energized by the thrill of innovation.
Generation Z is even more brand-savvy as their awareness of entertainment, computer, mobile, gaming, and social media brands is upwards of 80%.
7. It’s the interaction; not the transaction
Almost 60% of consumers will likely shop in-store this holiday season because they want to see, touch, and try the merchandise. In fact, so many shoppers want an in-store experience that some previously online-only retailers have established a physical store presence. And, the leading retailers are improving their in-store experience to surprise and delight the consumer.
8. Digital growth continues its upward trajectory
Sixty-six percent of retailers plan to increase their digital investment in the next 12 months and 77% expect a 16% increase over last year in digital revenues this holiday season. And, PwC believes the leaders in online shopping will likely experience 40% to 50% increases in digital revenues.
Areas of investment include mobile technology, advanced logistics aimed at faster real-time delivery, and enhanced purchase methods such as buy online and pick up in-store. However, consumers draw the line at using their phones for mobile payment: 61% prefer using traditional payment methods such as cash (preferred by survivalists), credit card (preferred by selectionists), debit card, gift card, or personal check.
9. What role does cybersecurity play?
More than 40% of consumers say a security breach in the last 12 months would likely affect their holiday shopping at a particular retailer. Millennials are even more concerned (52%) than shoppers over 35 (38%). Well aware of consumer concerns, both retailers (70%) and manufacturers (60%) are shoring up measures to address cybersecurity.
10. It’s a mad, mad world
The global economy has recently experienced significant volatility in the equity, currency and commodities markets. Wages in the U.S. have yet to break out of their low growth slump especially for the survivalists and negative headlines can weigh heavily on consumer sentiment.
Retailers and manufacturers rank the economy as the greatest impediment to a successful holiday shopping season, followed by consumer confidence.
For more information and to download an electronic copy of PwC’s 2015 Holiday Outlook, visit PWC.com/us/2015holidayoutlook.