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Holiday Season Deep Dive 2014

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A deep dive into the 2014 holiday season: What really happened in retail and what you need to know for 2015
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  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 2

    About This Report

    No two holiday seasons are the same, whether its an economic swing, unexpected weather or a shift in

    gas prices retailers must be prepared for the consumer response. The 2014 holiday season was by

    most accounts a successful season for the retail industry. With a strong national economy and individual

    economies, consumers felt confident in shopping for gifts and dcor and retailers were prepared with

    deals and customer services.

    This report provides a brief look at what happened during the 2014 holiday season in retail with

    consumer research and economic statistics. Whether you work in the industry or are simply interested

    in the trends, you can use this report as a guide to planning for the 2015 holiday season.

    The research within in this report can be found in the NRF Foundations Retail Insight Center, which is

    made possible by KPMG and contains thousands of consumer data points that can be drilled down into

    demographic-specific charts. This readily available information is valuable for use in planning and trend

    tracking.

    For the purposes of this report, holiday months refers to November and December, unless otherwise noted.

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 3

    Pre-Holidays: Optimistic Retailers & Consumers

    In October, NRF forecasted holiday sales to increase 4.1 percent to $616.9 billion, higher than 2013s

    actual 3.1 percent increase during that same time frame. This was welcome news for the industry after

    witnessing an often volatile 2014 thanks to weather and wavering consumer confidence.

    Economic indicators for consumers were also looking strong. When asked in October if the state of the

    U.S. economy would impact their holiday spending plans, four in 10 (41.4 percent) said yes, down almost

    20 percent from last year and the lowest amount since NRF first asked in 2009. This continued

    throughout the holidays as only 35.6 percent said yes in December. Consumers were feeling positive

    about their wallets and about the shopping season ahead of them.

    According to NRFs Holiday Consumer Spending Survey, the average person celebrating Christmas,

    Kwanzaa and/or Hanukkah planned to spend $804.42, up nearly 5 percent over 2013s actual $767.27. The

    survey found consumers were planning to spend an average of $459.87 on gifts for their family, up 6.5

    percent from $432 in 2013, and $80 on gifts for friends, up from $75 in 2013. Those celebrating the

    holidays were also planning to spend more on gifts for their co-workers ($26.23 vs. $24.52 in 2013), and

    others like babysitters and even pets ($30.43 vs. $26.65).

    Source: NRF Holiday Consumer Survey, conducted by Prosper Insights & Analytics. Asked only those who indicated that they plan to spend on the upcoming holiday shopping season.

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 4

    Retailers Retailers Retailers Retailers responded to the expected higher consumer traffic with a push to hire more seasonal responded to the expected higher consumer traffic with a push to hire more seasonal responded to the expected higher consumer traffic with a push to hire more seasonal responded to the expected higher consumer traffic with a push to hire more seasonal

    employees.employees.employees.employees. NRFs holiday employment forecast called for 725,000 800,000 new positions. Here are

    just a few of the expectations retailers had for their number of seasonal job openings:

    86,000

    25,000

    35,000

    45,000

    60,000

    >67,000

    70,000

    up 8,000 workers

    from 2013

    up 17,000 workers

    from 2013

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 5

    They Either Shopped Early, or They Shopped Late

    When consumer confidence in the economy is uncertain, discretionary purchases, such as clothing and

    dining out, are often the first to be cut. Since 2009 there has been a shift in how consumers cut back;

    men and women differ on what theyre adding to their do not buy list of items.

    Consistent with 10 years of survey findings, there were plenty of early-bird shoppers in 2014. In an

    October survey, four in 10 (40.4 percent) consumers reported they had either already begun or would

    start their holiday shopping before Halloween, while 40.9 percent planned to wait to begin in November

    (up slightly from 38.8 percent in 2013); 15.5 percent said theyd begin in the first two weeks of December,

    which is flat with 16 percent in 2013.

    Why do consumers start their holiday shopping before retailers even deck their halls, so to speak? Most

    agree it helps them spread out their spending (61.9 percent), half choose to do so to avoid holiday

    crowds (51.7 percent), and 51 percent say shopping early helps them avoid the stress of last-minute

    shopping. Whats interesting is that these consumers werent waiting for the temperatures to drop;

    nearly three in 10 (29.9 percent) say they shop for the holiday season year-round, and more than one-

    quarter (27.3 percent) say the desire to get their hands on specific items drives them to shop early; 44.744.744.744.7

    percentpercentpercentpercent shop early because the deals and promotions are too good to pass up.shop early because the deals and promotions are too good to pass up.shop early because the deals and promotions are too good to pass up.shop early because the deals and promotions are too good to pass up.

    2.0%

    5.3%

    16.2%

    27.3%

    29.9%

    35.0%

    44.7%

    51.0%

    51.7%

    61.9%

    0% 10% 20% 30% 40% 50% 60%

    Other

    I am using layaway services

    Habit

    I don't want to miss out on desired items

    I tend to shop for the holiday season year-round

    To give me more time to enjoy/celebrate the season

    Prices/promotions are too good to pass up

    To avoid the stress of last-minute shopping

    To avoid traditional crowds

    To spread out my gift shopping budget

    Why Consumers Start Shopping in October or EarlierWhy Consumers Start Shopping in October or EarlierWhy Consumers Start Shopping in October or EarlierWhy Consumers Start Shopping in October or Earlier

    Consumers who Start HolidayShopping in October or Earlier

    Source: Prosper Insights & Analytics Monthly Consumer Survey, October 2014. Asked among holiday shoppers who started holiday shopping in October or earlier.

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 6

    Online & Mobile Shopping: Not Slowing Down

    Holiday shoppers were eager to look online for gifts and other holiday needs: 56 percent planned to shop

    online, up from 51.5 percent in 2013 and the most in the surveys 13-year history. And its not just a few

    holiday odds and ends consumers are finding online, theyre taking care of a large chunk of their

    shopping lists. In fact, the average person planned to do 44.4 percent of their shopping online, the most

    since the question was first asked in 2006.

    Even if theyre not always checking out their virtual shopping cart, mobile devices are increasingly being

    used as a shopping tool: 35.8 percent of smartphone owners claimed they would research products and

    prices on their phone, and approximately one in four (23.9 percent) would redeem coupons with their

    smartphone. Whats more, during the biggest shopping weekend of the year, millions of Americans took

    to their mobile devices to help them find the best deals or scout the best locations to shop.

    Mobile wallet and mobile pMobile wallet and mobile pMobile wallet and mobile pMobile wallet and mobile payments were buzzwords by late ayments were buzzwords by late ayments were buzzwords by late ayments were buzzwords by late 2014. 2014. 2014. 2014. Through an app, a customer

    can link a payment service (such as ApplePay or Google Wallet) to a bank or credit account and then pay

    for merchandise at a bricks-and-mortar store check-out counter. While this payment option is being

    implemented at retail stores across the country, consumers are just as quickly picking up on the

    technology: 27.427.427.427.4 percentpercentpercentpercent of of of of average average average average consumers said they would be somewhat or very comfortable consumers said they would be somewhat or very comfortable consumers said they would be somewhat or very comfortable consumers said they would be somewhat or very comfortable

    using a mobile walletusing a mobile walletusing a mobile walletusing a mobile wallet;;;; and when broken out by age,and when broken out by age,and when broken out by age,and when broken out by age, 41.1 percent of 25 to 34 year olds are somewhat or

    very comfortable using their device to pay for items at the register.

    How Comfortable are Consumers with Mobile Payments?

    Source: Prosper Insights & Analytics Monthly Consumer Survey, October 2014.

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 7

    Thanksgiving Weekend

    In retail the spotlight focuses on Thanksgiving weekend. Good prices, great value, unique products and

    convenience are just a few of the crowd-pleasers. In 2014, early holiday promotions, the continued

    growth of online shopping and an improving economy changed the way millions of people approached

    the biggest shopping weekend of the year.

    According to NRFs Thanksgiving Weekend

    Spending Survey conducted by Prosper Insights

    & Analytics, 55.1 percent of holiday shoppers

    were or planned to be in stores and online over

    Thanksgiving weekend, down from 58.7 percent

    in 2013.

    There were a few factors that led to this shift

    and it was not that consumers were just not

    shopping. Retailers, recognizing that many

    shoppers were not waiting until Thanksgiving to

    gather items for the holidays, offered discounts

    and promotions earlier in the season. In response, shoppers didnt feel the pressure to head out to the

    stores over the holiday weekend. And, with an improving economy, shoppers also didnt feel they needed

    to brave crowds to save a few dollars.

    As a result, those surveyed that weekend said they spent an average of $28 less than they did the

    previous year over the same weekend. Total sales for the weekend, according to NRFs Thanksgiving

    weekend survey, showed a slight decrease, mirroring what other industry groups noted as a significant

    shift in how and when holiday shoppers want to buy gifts and other merchandise for both themselves

    and others.

    Source: Prosper Insights & Analytics, asked among consumers over Thanksgiving weekend.

    48.3%

    52.1%53.0%

    56.0%

    58.7% 58.7%

    55.1%

    45%

    47%

    49%

    51%

    53%

    55%

    57%

    59%

    61%

    2008 2009 2010 2011 2012 2013 2014

    Thanksgiving Weekend

    Shoppers

    Consumers Who Hador Planned to ShopThanksgiving Weekend

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 8

    The 2014 consumer The 2014 consumer The 2014 consumer The 2014 consumer waswaswaswas confident in confident in confident in confident in

    shopping online and shopping online and shopping online and shopping online and knew knew knew knew that any day that any day that any day that any day

    couldcouldcouldcould be Cyber Mondaybe Cyber Mondaybe Cyber Mondaybe Cyber Monday, , , , whether theywhether theywhether theywhether they wewewewere re re re

    shopping for jeans or groceries.shopping for jeans or groceries.shopping for jeans or groceries.shopping for jeans or groceries. According to

    the National Retail Federations Cyber Monday

    Expectations Survey, 126.9 million (52.3

    percent) holiday shoppers planned to shop

    online on Cyber Monday, which was down

    slightly from the 131.6 million who planned to

    participate in 2013. When asked how they

    planned to shop on Cyber Monday, 19.3

    percent said they would use their mobile

    device, and eight in 10 (84.5 percent) would use

    their home computers to shop online.

    Cyber Monday may not be holding the same novelty draw as it once had. Online shoppers can shop any

    day of the year, and usually find great prices and value-add associated with that experience. Walmart, for

    example, reported seeing their highest-ever online traffic and sales during the three-day stretch from

    Thanksgiving Day through Saturday. Target, with their free shipping offer through December 20, also

    saw record online sales levels throughout the season.

    The Results

    With retailers prepared and consumers set

    to shop, overall holiday retail sales

    increased to their highest level since 2011.

    According to the National Retail According to the National Retail According to the National Retail According to the National Retail

    Federation, total holiday retail sales, Federation, total holiday retail sales, Federation, total holiday retail sales, Federation, total holiday retail sales,

    which include November and December which include November and December which include November and December which include November and December

    industry sales, increaindustry sales, increaindustry sales, increaindustry sales, increased 4 percent to sed 4 percent to sed 4 percent to sed 4 percent to

    $616.1 billion,$616.1 billion,$616.1 billion,$616.1 billion, in line with the projected

    forecast of 4.1 percent growth.

    Additionally, non-store holiday sales, which

    is an indicator of online and e-commerce

    sales, grew 6.8 percent to $101.9 billion.

    Source: Prosper Insights & Analytics Monthly Consumer Survey, November 2014

    Source: U.S. Department of Commerce, retail sales for November and December, does not include automobile sales or gasoline station sales.

    3.8%

    6.9%

    14.5%15.8%

    18.9%19.3%

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20%

    2009 2010 2011 2012 2013 2014

    Cyber Monday Shoppers Using

    Mobile Device to Shop

    Cyber MondayShoppers

    $527.050

    $503.810$506.300

    $533.120

    $558.800

    $574.940

    $592.660

    $616.110

    $450

    $470

    $490

    $510

    $530

    $550

    $570

    $590

    $610

    $630

    2007 2008 2009 2010 2011 2012 2013 2014

    Total Holiday Retail Sales

    Total Sales, in Billions

  • 2014 HOLIDAYS - CHANGING LANDSCAPE AND ATTITUDES 9

    What You Need to Know for 2015

    Consumers still want a deal, but theyre not going to fight over it. Consumers still want a deal, but theyre not going to fight over it. Consumers still want a deal, but theyre not going to fight over it. Consumers still want a deal, but theyre not going to fight over it. With the economy

    improving, gas prices low and unemployment still ticking downward, consumers are a little less

    likely to hold out on purchasing an item if they need or want it right now. Thats not to say they

    dont need a promotion to convince them to purchase: 26.6 percent of women and 17.7 percent

    of men report they only purchase clothes if theyre on sale.

    Its official: the IIts official: the IIts official: the IIts official: the Internet has changed the game for the holiday season. nternet has changed the game for the holiday season. nternet has changed the game for the holiday season. nternet has changed the game for the holiday season. Consumers are

    becoming increasingly comfortable with making purchases online and on their mobile devices.

    These shoppers are not waiting for the weekend to hunt for gifts; theyre watching for

    promotions in their inbox and ordering gifts on their own time.

    Smartphone owners are comfortable using their phone as a shopping companion Smartphone owners are comfortable using their phone as a shopping companion Smartphone owners are comfortable using their phone as a shopping companion Smartphone owners are comfortable using their phone as a shopping companion even if even if even if even if

    theyre not on theyre not on theyre not on theyre not on board (yet) with mobile payments. board (yet) with mobile payments. board (yet) with mobile payments. board (yet) with mobile payments. The 2015 consumer is in the habit of

    keeping her phone in-hand (or close by), and retailers who optimize their mobile site or app for

    a greater in-store experience might gain an edge over the competition.

    Retailers not fully on-board with mobile might be missing out, but most are eager to meet

    consumer demand: Nearly seven in 10 (69.1 percent) retailers polled in Shop.orgs eHoliday

    survey said they had invested in optimizing their mobile websites prior to the 2014 holiday

    season.

    There is no shopping seasonThere is no shopping seasonThere is no shopping seasonThere is no shopping season consumerconsumerconsumerconsumers like to shop early, and late s like to shop early, and late s like to shop early, and late s like to shop early, and late and even in and even in and even in and even in

    between if the deals are good enoughbetween if the deals are good enoughbetween if the deals are good enoughbetween if the deals are good enough.... Both consumers and retailers are breaking the tradition

    of keeping holiday shopping and promotions to the days between November 1 and Christmas

    Day. With nearly half of those celebrating the holidays shopping before November and the other

    half waiting until Thanksgiving weekend or later to start their shopping, retailers are planning

    their promotions accordingly. Several companies benefited from front loading their holiday

    promotions in late October and early November, while others pushed the limits by offering

    unique shipping and online promotions in the final hours to attract procrastinators.

    Seasonal employees are critical to a successful retail holiday season. Seasonal employees are critical to a successful retail holiday season. Seasonal employees are critical to a successful retail holiday season. Seasonal employees are critical to a successful retail holiday season. Holiday hires help

    ensure that retail stores are adequately staffed for the influx of customers, especially when

    consumers are fiscally ready to hit the stores. In the digital age there is an added level of

    importance to a well-staffed store. Retailers must be prepared to exceed expectations on in-

    store customer service. Part of the focus in recent years during the holiday season has been

    adding sales force to manage traditional holiday lines and crowds with mobile check-out options.

    Some companies even up their staff in warehouses and distribution centers, not traditionally

    recognized by actual shoppers but crucial nonetheless.

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