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Shoppers not spending, shifting online

10/20/2015

Consumers’ intentions often differ materially from their behavior and retailers better hope that is the case this year or it won’t be a happy holiday, according to the latest consumer research from the National Retail Federation.



A survey of nearly 7,300 consumers indicates that average spending per person this year will be essentially flat with the prior year, increasing about .04% to $806, compared to $802 last year. That is the highest amount in the survey’s 14 year history but the marginal increase – should it prove accurate – is disappointing news to retailers and contradicts an earlier NRF forecast. The trade group projected in early October that total holiday sales would increase by 3.7% to $630.5 billion and online sales would increase between 6% and 8% to represent $108 billion, or a little more than 17% of the total. The forecast of 3.7% growth was based on various economic factors and released while the consumer research was ongoing Oct. 5-13.



“We continue to see positive momentum in retail sales growth, giving us reason to believe consumers will show up this holiday season as they look to take advantage of all of retailers’ promotional offerings,” said NRF president and CEO Matthew Shay. “In an effort to attract all shoppers – from the extremely price sensitive to the online millennial, retailers will be offering exclusive incentives, low prices, price-matching, top toys and everyone’s favorite – free shipping and buy online pick up in store offers.”



The consumer research also revealed what most retailers already know – this will be the most omnichannel Christmas ever. For example, almost half of holiday shopping (defined as browsing AND buying) will be done online, increasing to 46.1% this year from 44.4% last year. Of those who plan to shop online, 46.5% said they will take advantage of retailers’ buy online pick-up in store, or ship-to-store options. Free shipping is the most anticipated promotion with 93.1% of online shoppers indicating they will use a free shipping offer when shopping for holiday merchandise.



Of course, mobile will play and even more significant role this year. The survey found that 21.4% of smartphone owners will use their device to purchase holiday merchandise this year, the highest seen since NRF first asked in 2011. Additionally, more will use their smartphone to research products (37.9% vs. 35.8% last year) and to look for a way to connect with a retail store by looking up retailer information, like store hours and directions (28.4% vs. 26.9% last year). One in five (20.3%) will specifically use their smartphone to look up product availability in a store.



Ultimately, shoppers may behave differently (spend more) than when they took NRF’s survey in early October. However, the latest research does introduce an element of uncertainty because it was conducted when many consumers had already begun their shopping. Roughly 40% of holiday shoppers said they begin their holiday shopping before Halloween. Another 41.5% begin in November and 18.7% wait until December.



When asked why they begin shopping early, most of those that responded that they shop before or in September or October say it’s to spread out their budget (61.4%), avoid the November and December Crowds (48%) and to avoid the stress of last-minute shopping (46%).


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