Two categories stand out in the 2017 holiday season: millennials and Barbies.
Millennials ages 25 to 34 stand out because they were the biggest spenders from Thanksgiving Day to Cyber Monday – although young adults ages 18 to 24 were projected to increase their overall holiday spending more than any other age group.
Barbie stands out as the toy expected to be most popular with girls for the third consecutive year, with Legos the biggest sellers for boys.
These results come from an annual holiday survey
, released in November this year, by the National Retail Federation (NRF), the world’s largest retail trade association, and Prosper Insights & Analytics, a consumer research firm serving retail and other industries.
That millennials were the biggest spenders over Thanksgiving weekend is not a surprise, given that this generation has been in the workforce a few years and that its size alone has clout, said Kevin Kelly, Grant Thornton LLP’s National Retail Industry practice leader. Millennials represent the largest generation in history – 92 million compared with 77 million baby boomers. “Millennials’ purchasing power continues to increase as this group grows older,” Kelly said. In addition, the millennials’ focus on a unique consumer experience will carry through their gift purchasing. “These gifts might include brands they themselves are passionate about,” said Kelly. “They continue to support their brands through purchasing power, as that power grows.”
Economic outlook favors spending
Regarding the overall economy, Kelly sees the stock market’s strength, trends of lowering unemployment and anticipated tax reform as having a significant impact on consumer mindsets as they shop during this holiday season.
Shopping is up
The overall shopping news is good for retailers. The NRF projected retail sales this holiday season to exceed last year’s numbers by about 4%, with sales of $679 billion to $682 billion. An estimated 174 million Americans, more than previously predicted, shopped in stores and online during the five-day holiday weekend that began with Thanksgiving and ended on Cyber Monday. Black Friday was still the favorite day for in-store shopping, with an impressive 77 million consumers favoring that day. Small Business Saturday was second with 55 million consumers.
However, Black Friday sales started earlier -- at least a week or more before Thanksgiving, said Kelly. “Merchandise was going on sale three weeks before Black Friday. Black Friday has become ‘Black Friday month.’ The importance of the day has grown significantly beyond the actual day.” The same is true for Cyber Monday. “The shopping-event days are being turned into shopping-event weeks, where retailers are taking full advantage of consumers’ expectation to find a deal on a particular day, and expanding the number of days those deals are offered.”
Mall of America outside Minneapolis, billed as the nation’s largest mall, was an example of good deals. On Black Friday, people began lining up in the wee hours for the 5 a.m. opening of the massive complex. By about 11 a.m. a family with two kids had a pile of packages. The man said he’d arrived much earlier (about 4 a.m.) to be able to buy big-ticket electronics at a significant markdown. He’d then gone home to gather the rest of his family for more shopping and maybe a bite to eat. His wife said she enjoyed the festive atmosphere – and confirmed that her daughter was getting what she wanted most, a new Barbie.
Some consumers are following a new trend -- ordering online and then picking up the items from a store. That way, shoppers feel more secure they will get what they ordered, and they also have an opportunity to enjoy the full store experience
(and, retailers hope, purchase a few more items while in the store).
That physical experience – enjoying what the store offers – is still very important to consumers, said Kelly, “Let’s not forget the full store experience. Remember, 90% of sales still happen in the store.” To maintain the interest, many retailers plan to make significant investments in stores to enhance that experience, Kelly said, such as upgrading store environments, hosting significant events in stores or offering in-store-only deals. For example, a small women and children’s boutique in the Chicago area offered a special holiday-shopping night of extended hours, refreshments, surprise onetime markdowns and a 15%-off-entire-purchase deal.
Breaking down the stats
This year’s NRF survey shows that 61% of consumers will buy clothing and accessories, the same as last year, while 59% will give gift cards, up from 56% last year.
As for types of gift cards consumers plan to give, the top two were for restaurants (35%) and department stores (33%). Those figures were followed by credit cards.
Books, music, movies or video games will be given by 44%, the same as last year. Forty-one percent will give toys, down from 42% last year. Food or candy gifts are up, at 34% from 31%; and 29% of shoppers plan to give electronics, down slightly from 30% last year.
Shoppers also plan to do some shopping for themselves while they’re busy buying gifts. And they care enough to make donations. A new question on NRF”s survey this year found that 38% of consumers plan to donate money to a charity or cause while 37% plan to donate items such as holiday meals to those in need. Eighty percent of those donating said donations will not have an impact on their overall spending.
Again millennials are setting new trends in giving, in that their charitable giving tends to be less traditional. They tend to gravitate toward “a cause,” or social issues, more than a particular organization or institution. They want to know how their dollars are spent and the impact of their gifts.
Brands with elevated social giving are attractive to this group – for example, a brand that gives away one pair of shoes (TOMS
) or one pair of socks (BOMBAS
) for every pair purchased, or donates a percent of every purchase, to a specific charitable cause.
Internet is up
For the first time, the internet won as the most favored place to search for gifts (59% of consumers). That is not surprising, said Kelly. “Consumers love the convenience of shopping online.” Cyber Monday became the largest online shopping day ever, generating $6.6 billion in sales, up 16.5% from last year
“Consumers are also channel agnostic,” said Kelly. “They love the convenience of shopping online, but they still like the experience of going to a physical store.”
At the same time, Thanksgiving Day itself, when many stores opted to open, was the least popular shopping day of the season, with only 20% of consumers participating.
“Deals will be offered beyond Thanksgiving Day, Black Friday and Cyber Monday,” said Kelly, “and most people believe that spending Thanksgiving with family and friends is more enjoyable than shopping.” He noted that more retailers opted to stay closed on the holiday so their staff could be home with families. Mall of America is an example. It remained closed on Thanksgiving.
Overall, the season has been a good one for retailers so far, and prospects look good for the balance of the season, which is good news for companies and for those who work for retail companies. Retail remains the nation’s largest private-sector employer, supporting one in four U.S. jobs, or 42 million working Americans. The retail industry contributes $2.6 trillion to the annual gross domestic product.
Of course, the true worth of the season to retailers will not be known until financial results, which include the impacts of promotions and deep discounts, are determined. That said, retailers remain confident as the shopping season moves into full swing.
Partner, National Retail Industry practice leader
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