Consumers to spend 4% more this holiday season, fewer prime shopping days

by Kim Souza ([email protected]) 570 views 

(photo courtesy of Walmart Inc.)

Several reports on holiday spending indicate healthy consumer demand despite a cautious sentiment about the economy. The National Retail Federation reported Thursday (Oct. 24) consumers will spend an average of $1,047.83 this holiday season, up 4% from a year ago.

Shoppers between the ages of 35 and 44 will spend more at an average of $1,159. The recent overall forecast estimated that holiday retail sales in November and December will be up between 3.8% and 4.2% over 2018 for a total of between $727.9 billion and $730.7 billion.

“Consumers are in good financial shape and willing to spend a little more on gifts for the special people in their lives this holiday season,” NRF President and CEO Matthew Shay said. “Retailers are fully prepared to meet the needs of holiday shoppers looking for that perfect mix of sales, quality and selection.”

Shay said retailers are expected to import near-record volumes of merchandise ahead of tariffs scheduled to take effect on a wide range of consumer goods from China on Dec. 15.

Shay said the consumer survey found shoppers will spend in the following three main categories during the holidays:
• Gifts for family, friends and co-workers, at an average $658.55;
• Non-gift holiday items such as candy and food, decorations, greeting cards and flowers at $227.26; and
• Non-gift purchases that take advantage of the deals and promotions throughout the season at $162.02.

“Younger consumers are helping drive the spending increase this year,” Prosper Insights Executive Vice President of Strategy Phil Rist said. “They’re not just spending on their immediate family members, they’re also treating their larger circle of co-workers and friends to gifts.”

More than half of shoppers between the ages of 25 and 34 (52%) plan to purchase gifts for co-workers, and 82% of those between 18 and 24 plan to purchase gifts for their friends.

Deloitte predicts holiday retail sales per household will be $1,496. The survey found the bulk of spending ($596) will go for experiences and celebrations, including entertainment and socializing away from home. Gifts and gift cards make up the second-largest spending items at $511. The remaining $389 will toward non-gift clothing and home/holiday decor.

Deloitte’s survey also found consumers will seek promotions to make their dollars go further. Consumers (81%) expect promotions will influence them this holiday season, with price discounts (74%) and free shipping (72%) at the top of their wish list, far ahead of other incentives like buy-one, get-one (39%) and cashback (29%), the report states.

The survey also revealed consumers prefer free shipping to fast shipping. A whopping 85% put free shipping as the most important factor when ordering online. Just 15% said speedy receipt of online orders is the most important factor in shopping. Deloitte found 68% expect no more than two days. If shipping is free consumers are willing to wait up to seven days in some cases.

“Every year respondents tell us that the most important factor is discounts,” said Rod Sides, vice chairman, Deloitte LLP, and U.S. leader, retail, wholesale and distribution. “This year that tops out with not just promotions, but also free shipping.”

Deloitte also found 69% plan to research and make purchases online this holiday season and purchase in stores while 57% plan to use stores to see the items and then plan to order them online. Nearly half of consumers said they will also buy online and pick up in stores. Sides said this indicates the continued rise of omnichannel and the importance for retailers to offer consumers choices.

This survey also found promotions, discounts, and other offers are the No. 1 thing people want from retailers in return for sharing their personal information, among 61% of respondents – with offers for preferential treatment like faster customer service (34%) and faster checkout (31%) a distant second and third.

This holiday season has six fewer days between Thanksgiving and Christmas, which has retailers like Walmart pushing out sales and promotions earlier this year. Walmart said Thursday it will help customers make the most of this year’s shortened holiday season by offering them more savings, more ways to shop, more top gifts to shop for and more fun in stores than ever before. Analysts call this “Christmas Creep,” which at Walmart has begun before Halloween.

Walmart will begin its holiday sales season Oct. 25 at midnight. At that time early deals will drop on to allow customers to jumpstart their holiday shopping on electronics, toys, home and sporting goods. Walmart outlines its early sales promotions online.

Nearly 40% of holiday shoppers said they plan to start buying items before November, 43% plan to wait until November, and 18% will wait until December, according to the NRF survey.

A survey by JLL Retail found Amazon, Walmart and Target will be the most shopped retailers this holiday season. Amazon at 38.1% was narrowly the most popular. Walmart ranked No. 2 at 36.2% and Target came in third at 29.5%. Kohl’s garnered 10% and Macy’s was at 8%. The survey found households with budgets larger than $500 are more apt to also shop Best Buy and Nordstrom among their top 10 shopping venues. Those with a more modest budget chose Kohl’s.

“This year we are continuing to see the merging of retail channels with 68.7% of responses showing that consumers will shop at a retailer with a physical presence – whether that’s in-store, online, or picking up in-store after an online purchase,” said Greg Maloney, CEO of JLL Retail.

Maloney said he believes sales will likely be on the high-end of the JLL forecast of 5% – barring a substantial setback in the economy. He also downplayed the impact of trade concerns on the consumer.

“By in large, the average consumer is not going to be overly concerned by trade discussions until they manifest in higher prices or slower economic growth,” he said. “The consumer has continuously buoyed the economy and I don’t expect that to change without some sort of significant setback.”

Deloitte also surveyed consumers on their economic outlooks which indicted 44% expecting it to weaken in the coming year, well ahead of the 27% in the 2018 survey.