Empower is keeping a pulse on predictions, anticipated trends to and potential implications for marketers to consider for the holidays. This review will dive into specific pre-holiday and holiday expectations based on results from prior years and forecasts from several experts like the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC).
As expected, projected holiday retail sales growth varies by forecaster (Figure A).The NRF expects online and other non-store sales to increase 11%-14%, which is anywhere between $162.6 billion and $166.9 billion. They have, however, previously warned that economic uncertainty from newly introduced tariffs and fluctuations in the stock market could impact consumer spending plans leading up to the holidays.
Rod Sides, Vice Chairman at Deloitte LLP, called out convenience as “the new retail currency,” positing that retailers offering “seamless experiences, ample inventory and speedy fulfillment” are most likely to win this holiday season.
Understanding and delivering on consumers’ need for convenience will be crucial in coming out on top during this abbreviated holiday season. To no one’s surprise, Amazon is leading the pack by promising new options for delivery and announcing last week that Prime members across the U.S. can choose free one-day delivery on over 10 million items. However, Amazon isn’t the only retailer ensuring convenience is king. Several big box retailers including Walmart, Best Buy, and Target are doubling down on click and collect or “BOPIS” (Buy Online Pick Up in Store) as an option that has been increasingly utilized by consumers over the last couple of years.
E-commerce sales between November 2018 and January 2019 (seasonally adjusted and excluding gasoline stations, motor vehicles/parts dealers and food services) grew approximately 11% to total $126.4 billion. Experts including Bain, Deloitte and RetailNext are forecasting between a 14-20% increase for 2019 compared to the same period in 2018. According to RetailNext, brick-and-mortar store performance will continue its current resurgence – initiated by 2018’s positive holiday results – and post year-over-year increases upwards of 3.5%. Top seasonal category performers are expected to include beauty, off-price, warehouse clubs, home improvement and home furnishings segments.
Regarding expected high-volume purchases this year, the NRF & ICSC predict that gift cards will be the top item requested and purchased this year followed by apparel, footwear, accessories, books, movies, games and toys. For children ages 0-12, the expectation is that 92% will ask for toys this year, and for those ages 13-19, gift cards are the hot ask (61%). Contrarily, Deloitte forecasts that clothing will lead gift cards/certificates and toys as the top gift. The Deloitte experts also believe that the average number of gifts will fall to 15 from a peak of 21 in 2007.
Despite potential economic uncertainty, the NRF says consumers will spend 4% more than they did last year at an average of $1,047.83. PwC supports this outlook and believes consumers are optimistic about holiday shopping this year with 86% reporting they will spend the same or more than last year. They expect the biggest spenders to be holiday travelers, college graduates and telecommuters. It is also expected that almost half of young millennials (age 24-27) will spend more this holiday season than they did last year, compared to 33% of consumers overall.
We did encounter conflicting information from JLL, Deloitte, and AlixPartners, all reporting that consumers say they will spend less this year on gifts than the prior year. According to Deloitte, only 7% of respondents cite general concern about the economy as a reason. AlixPartners believe tariffs threaten to dampen holiday spending. One-fifth of consumers with flat holiday budgets say they would forgo a purchase if tariffs boost prices more than 10%.
According to JLL, roughly one-third of consumers will start their holiday shopping before Thanksgiving this year. Some, believe it or not, have already finished their shopping. The NRF highlighted that gifts for family, friends and coworkers will account for 63% of spend, non-gift holiday items – candy, food, décor, greeting cards and flowers – will cover 22% while other miscellaneous non-gift purchases will account for the remaining 15%. The NRF sees holiday shopping shake out like this:
- 56% will shop online
- 53% will shop in department stores
- 51% will go to discount stores
- 44% will shop at grocery stores
- 34% will shop at clothing and accessory stores
- 23% will shop at electronic stores and local small businesses
Stay tuned for more Empower insights as the holiday shopping season continues!