The Supply Side: Amazon, Walmart holiday sales expected to shine

The Christmas holiday peak shopping season is just 10 weeks away, and a recent survey by Coresight Research found more than 75% of consumers plan to buy goods from Walmart and/or Amazon this holiday season.

Deborah Weinswig, CEO of Coresight Research, said retailers can expect solid holiday sales overall. She said lower gas prices are a plus for holiday spending and could provide as much as a 0.5% boost to sales. The National Retail Federation said 2018 sales totaled $707.5 billion, rising 2.9% from the prior year. Weinswig expects holiday sales in November and December will grow between 3.5% and 4% over last year’s results. This pegs holiday sales to range between $731.5 billion and $735.8 billion in 2019.

Weinswig said reports show that 88% of Amazon Prime members plan to buy on Amazon, compared with about 66.4% of non-Prime members who plan to complete some of their holiday shopping on Amazon. The report also found nearly 52% of consumers surveyed said they plan to switch from Walmart to Amazon for most of their holiday shopping. Nearly one in three said they plan to switch from Target, and 23% said they will switch their shopping destinations from Best Buy. Another 20% said they plan to move holiday shopping from Kohl’s to Amazon.

While Amazon looks to be the favored choice for online buying, consumers will also shop at brick-and-mortar stores this holiday season. Weinswig said Walmart will lead in that category. The biggest reason 44% of respondents gave for shopping in stores was to browse for gift ideas. One in four said they like to see and test products before buying them, and 37.6% said they enjoy shopping in stores.

Coresight reports 68% of respondents said they plan to make purchases online and in stores. Weinswig said consumer confidence remains high, although it has experienced recent volatility since the escalation of the U.S.-China trade conflict.

TARIFF IMPACT
The National Retail Federation also has said the underlying state of the U.S. economy is sound as more people are working, taxes are lower and incomes are improving. Jack Kleinhenz, chief economist for the trade group, has said U.S. households are in good shape. He said the only real threat to a strong holiday sales season would be more volatility in the financial markets and increased trade tensions that could dampen what has been robust consumer confidence.

Another recent survey completed by shopping rewards app Shopkick found 60% of those surveyed expect trade tariffs to impact where they shop this holiday season and how much they spend. Shopkick found 38% of shoppers expect tariffs will cost their households up to $500, and 30% said tariffs could negatively impact their households by as much as $1,000 this year. Spending more on goods that incur tariffs will mean less overall money to spend for the holidays.

Shopkick found 29% of consumers stocked up on goods ahead of the Sept. 1 tariff deadline, and one in four said they will be forced to switch to American-made products. Generation Z (57%) was the most likely demographic to factor the effects of tariffs into their holiday spending.

SHOPPING EXPECTATIONS
Shopkick also asked shoppers how they plan to tackle their holiday shopping. Of the 30,000 consumers surveyed by Shopkick, just 3% plan to do most of their shopping on Cyber Monday. Shoppers instead plan to spread their shopping out beginning just before Thanksgiving, Black Friday and on Cyber Monday to take advantage of promotions.

This survey found 53% of consumers will do a majority of their shopping at big-box retailers like Target or Walmart. One in five said they will plan to do most of their shopping on Amazon. Shopkick also found consumers said they like to go to stores for inspiration and will do price comparisons for all their holiday purchases.

Shopkick also found 84% will turn to their mobile devices before making a holiday purchase. They cite product reviews, price comparisons, looking for promotions and other insights as the primary reasons they use mobile technology in the shopping process.

About 42% said low prices are the most important incentive for the purchases they make, while 31% seek free shipping and other rewards for their purchases. Easy returns were important to just 6% of those surveyed.

Shopkick found that 55% of Baby Boomers and 54% of Gen Z shoppers plan to do most of their shopping at brick-and-mortar locations. The promotion days of Black Friday will be a big draw for 74% of Gen Z shoppers, while 68% of Millennials said they will most likely shop Cyber Monday.

Generation Z consumers are also the most likely to shop on Thanksgiving Day with 41% planning to do so. Most of those transactions will likely be in stores, according to 83% of the Gen Z consumers surveyed. Millennials are most apt to shop by smartphone with one in three Millennials choosing mobile commerce over brick-and-mortar. Shopkick found 76% of Gen Z shoppers surveyed said they plan to use their mobile phones for price checking while they are inside brick-and-mortar stores.

The two biggest spending categories among Shopkick consumers are toys and technology in all the generations. Generation X (40%) plans to spend the most on technology followed by Generation Z at 35%. Millennials (30%) said they plan to spend the most on toys this holiday. Among all the generations surveyed, 20% said they will purchase apparel this holiday, and 34% said they would purchase electronics for holiday gifts.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.