Sales and Coupons Remain Most Successful Tactic in Driving Holiday Shoppers to the Store
Holiday 2016 is proving to be both an opportunity and a challenge for retailers, as they’re faced with catering to the behaviors and preferences of multiple generations of shoppers. It’s becoming increasingly clear that Generation Z (children ages 10-17) consumers have a significant and growing influence on household spending. And as a result, new trends are emerging this holiday season, including the record mobile app purchases we saw on Black Friday/Thanksgiving weekend.
Catering to these trends, while re-posturing to serve a younger group of influential shoppers will be key to a retailer’s success this season and beyond. Learning from Thanksgiving weekend and Cyber Monday that consumers are increasingly turning to their phones to both search and purchase, retailers should be investing in mobile, for example, and should be focusing on strategies targeting the mobile consumer, such as Buy Online, Pick up In-Store (BOPIS) or Buy Online, Reserve In-Store (BORIS).
That being said, retailers need to strike the right balance of focus on each of the multiple generations of shoppers, each of whom have varying levels of consumer spend and vastly different expectations of how they want to interact with retailers. They must cost-effectively adapt to the needs of future generations to remain relevant, while ensuring they do not alienate the generations that are still producing the vast majority of their sales. To shed light on this issue, we recently completed extensive consumer research focusing on the attitudes, influences and shopping behaviors driving the emerging and future Generation Z and Millennial consumers.
So what does this mean for Holiday 2016?
With limited doorbusters and consumers already proving to shop online from their couch this holiday, what is going to drive them into the store?
It all comes down to price
Regardless of age, the answer remains the same. Sales and coupons are more influential than any other tactic in motivating a consumer’s decision to enter a store this holiday season. A significant 89% of the consumers we spoke with said deep discounts (which includes coupons) are a key determinant of what stores they will visit for holiday shopping this year. Already since Black Friday, we’re seeing retailers comply with heavy in-store discounts well below what we expected, as they look to eliminate their excess inventory and drive top line sales.
Another motivator can be store window displays, as it was found to drive 87% of the respondents. And 79% of consumers surveyed said they would be influenced on what stores to visit this holiday season based on a retailer’s website.
What’s at the top of everyone’s gift list?
Despite popular belief, an overwhelming percentage of respondents both want and will be including gift cards in their holiday shopping. In fact, 62% of all study respondents with a preference, prefer to receive a gift card rather than a gift. And this was consistent across all generations studied, which is an indication that people would like to select their own gifts, rather than receive a gift that may be wrong for them. Eighty-three percent of Millennial parents plan to include gift cards in their holiday purchases, and 32% of respondents who intend to buy gift cards this holiday indicated that gift cards will comprise at least half of their holiday budget.
Interestingly, we found that intent to purchase gift cards grows as income levels grow among Millennials that have children; however, while inclination to purchase gift cards tends to be stronger among higher earners, these shoppers do not necessarily intend to spend a greater percentage of their holiday budget on gift cards.
Apparel category is going to be a big winner this holiday
Of course not all holiday dollars will be put towards gift cards. And consumers are planning to allocate a fair share of their wallet towards apparel and footwear. Millennial and Generation-X parents are planning to spend 40% of an assumed $500 holiday budget for their children on clothing and shoes, versus a small 16% on gaming consoles and games. And surprisingly, when children were asked how they wanted a loved one to spend $500 for their gifts, apparel won out over all other categories, including games.
This is a very interesting time for retail, as we’re in the midst of a generational shift of consumers. As Generation Z begins to gain a foothold in the consumer-spending environment and Millennials mature, their expectations are transforming the retail landscape. In order for retailers to remain competitive they must begin to develop a balanced approach to serving Baby Boomers and Generation-X (who still have the vast majority of the spending budget), while positioning themselves to best serve the emerging and future consumer segments for longer term success. Contrary to belief, there is huge differences between the Millennials and the Generation Z and those need to be reflected as this generation continues to grow in overall importance.