CPC Strategy: Amazon, Walmart look to benefit from strong holiday spending

Consumers recently surveyed by San Diego-based CPC Strategy overwhelmingly (80.1%) said they will shop Amazon for Christmas gifts this year. Walmart came in second with 57% of respondents planning to shop the Bentonville-based retailer for online holiday purchases. One in three respondents said they plan to shop online at Target this year.

Nii Ahene, the chief operating officer at CPC Strategy, told Talk Business & Politics the strong economy and soaring consumer confidence should help to push holiday sales higher at brick-and-mortar stores and online. The National Retail Federation forecasts total sales, excluding money spent on automobiles, gasoline and restaurants, to increase between 4.3% and 4.8% compared with last year. That puts total spending at about $720 billion.

Ahene said the CPC report found 67% plan to spend about the same as last year and 11% plan to spend more. The report also cites one in five plan to spend less than in 2017. He said 77% plan to spend the same or more and those spending less could be consumers sitting on higher debt levels. He said there are always consumers who struggle around the holidays and the 20% in the survey was in sync with prior-year reports.

The CPC report also found 40% plan to buy a majority of their holiday gifts prior to Thanksgiving. Amazon’s big push during its Prime Day in July could have including consumers who were shopping ahead. He said while roughly half of consumers indicate they will shop online, they will also shop in brick-and-mortar stores.

Ahene said mall operators and big box retailers must continue to make the shopping experience relevant and easy. New products can be a draw for consumers to seek out products in stores, and Ahene said retailers like Macy’s — who does a good job with the store-within-a-store concept — have found some success with that strategy.

He said the Sephora relationship with JCPenney also is a traffic driver. The Kohl’s relationship with processing Amazon returns is another great partnership from driving traffic into brick-and-mortar stores. Ahene expects to see more partnerships and pop-up stores in stores this holiday.

Ahene applauds Walmart eCommerce in trying to expand its inventory mix with the addition of Lord & Taylor, Moosejaw and other specialty merchandise which is a strategy to expand the Walmart brand to more consumers. The CPC survey found the likelihood of shopping at Walmart increases with age and gender, as 70% of women between 45 and 54 plan to shop at Walmart.

A previous survey by Kantar Retail found the average Walmart shopper is a “50-year-old woman with an annual household income of $53,125.”

CPC found 70% of respondents between the ages 45 and 54 plan to spend the same or more than last year. Of respondents between the ages 55 and 65, 75% plan to spend the same or more time than a year ago. Ahene said that trend hints at a successful holiday season for Walmart since it’s been doubling down on efforts to compete with Amazon.

Millennials between 25 and 34 are the largest demographic planning to spend more this year, with one in four indicating a bigger holiday budget. Another 63% of Millennials said they plan to spend about the same as last year. The report cites the additional spending by Millennials point to some big transitions the generation is going through.

“They’re the largest generation in the U.S. labor force,” the report said. “And while the youngest are graduating college, older Millennials are getting married and having children. In 2016, Millennial women accounted for 82% of U.S. births.”

The timeline for shopping this year doesn’t see consumers gravitating toward the usual shopping days, the report said. The number of shoppers planning to buy gifts during Thanksgiving weekend was 30%, down 2% from a year ago. Out of the three biggest shopping days — Thanksgiving Day, Black Friday, Cyber Monday — the steadiest appears to be Black Friday, with 20% planning to shop then. The report found Thanksgiving Day and Cyber Monday will see fewer shoppers this year, down 4.8% and 3.5%, respectively.

Another takeaway from the CPC report is consumers are getting smarter about how and where they will spend this year. Ahene said with 20% planning to spend less, it’s important to be where shoppers are and have what they want to purchase at a value.