According to the leading research group, Deloitte estimate, the holiday sales this year is estimated to rise 4-4.5% as against 2016. The US retail sales between November 2016 and January 2017 (seasonally adjusted and excluding automotive and gasoline) grew 3.6% and totaled $1.0 trillion, citing the US Commerce Department, the statement issued by Deloitte said.
This year’s holiday survey suggests that online channels will capture a majority of 51% of Americans’ holiday budgets, contributing to an estimated 18-21% increase in 2017 e-commerce sales as against 2016. In-store purchases are expected to account for only 42% of this year’s holiday purchases. The average consumer, according to our survey, plans to purchase 15 gifts this holiday season, roughly the same as in 2016; half of its respondents admitted that they were planning to purchase gifts for themselves while shopping for others. While shopping for others, 53% of respondents plan to buy indulgent gifts for others that the recipients would not buy for themselves.
Non-gift spending is expected to account for almost two-thirds (65 percent) of the average holiday budget this year, as consumers say they plan to spend more on household essentials such as clothing or furniture (29%), as well as experiences such as socializing at home, travel, or tickets to sports or entertainment events (39%). The number of gifts purchased this holiday season is expected to be stable, with consumers likely to average one more gift than in 2016. Nearly 1 in 5 respondents claim that they plan to take advantage of holiday sales. Those who do are likely to spend 23% of their budgets after December 25, the statement said.
With US retail sales totaling $3.7 trillion in 2016, the Deloitte survey indicated that the consumer spends sentiment continued to improve: 79% of its respondents planned to spend as much or more this holiday season as they did during last years. In short, this year’s holiday shopping season may well be worth upwards of $1 trillion to American retailers, the report said.
Consumer Spending Patterns
A closer look at the data suggests some interesting patterns in consumer spending. For instance, the reasons cited most often by our respondents for spending less than last year during the 2017 holiday season encompass factors such as saving more, paying down debt, higher food prices, and a worsened financial situation, among others. While shoppers may aspire to be less consumed by consumerism, the numbers tell a different story—namely, that the lure of shopping, with its own type of experience, is likely to remain in high demand. All of this likely bodes well for retailers that can provide a differentiated shopping experience along with unique products, an assortment of in-demand merchandise, and a variety of shipping options, the report pointed out.
What is more, a demographic analysis of the survey results revealed that higher-income shoppers were expected to spend nearly double ($2,226) the overall average ($1,226), while households with annual incomes under $50,000 are likely to spend about 48% of this amount. Those with graduate or professional degrees are slightly more likely to earn and spend more than other segments.
Today, consumers have more options for how and where to spend their money, with both switching costs and brand loyalty lower than ever before. To survive, many retailers are finding ways to serve individual consumers in ways tailored to their circumstances and desires—transforming both their value propositions and their business models, the statement said.
Stating that online has edged out in-store this holiday season as consumers’ preferred retail channel, capturing 51% of the survey’s respondents’ anticipated holiday spend, the report went on to add that the in-store purchases, on the other hand, are likely to account for only about 42% of the respondents’ holiday spend. (The remaining 7% of spending is expected to occur through channels such as print catalogs and direct mail promotions.) This may represent a watershed moment in holiday retail, as last year’s survey showed respondents’ spending split equally between online and in-store, at 47% each. Also noteworthy is that 3 out of 10 survey respondents said that it is important that retailers have both a physical and an online presence, the statement said.
The retailers most likely to survive amidst the rising tide of online purchases are those that can provide a tremendous variety of offerings while maintaining a more personalized level of customer engagement than their competitors, regardless of the interaction channel. The survey suggests that several competitive attributes are especially important in helping retailers win consumer wallet share:
Variety of available delivery options
Availability of hard-to-find/unique products
Variety of available products/styles
Online retailers are anticipated to win a greater share of consumers’ holiday budgets in part by outperforming in-store venues in five specific areas. In addition, the study also revealed that consumers in certain demographics, including higher-income households and Generation X, are likely to visit a slightly wider variety of retail store formats than those in other demographics, with Generation Z consumers, seniors, and those with annual household income less than $50,000 visiting the fewest.
Younger shoppers and those in higher-income households (with an annual income of $100,000 or more) are expected to spend significantly more online than seniors (those 65 and older). Among the most popular purchase categories, clothing is expected to consume the largest proportion (25%) of the average household budget, with toys (18%) and electronics (16%) rounding out 60% of shoppers’ total allocation.
Preferred Payment Methods
Among preferred payment methods, 52% of higher-income and 40% of mid-range households cite using credit cards, while lower-income shoppers prefer to use debit cards. Additionally, the use of Smartphones as a digital payment platform continues to rise. Shoppers electing to pay via Smartphone most often said that they planned to use a retailer’s dedicated app, a third-party payment app, or go directly to a retailer’s website, the study added.