‘Tis the season to be (online) shopping: the upcoming holiday season is responsible for as much as 30 percent of a retailer’s sales for the year, and, according to official data published by McKinsey & Co., this percentage is likely to rise.
A recent retail report published by the company shows almost a third of shoppers are expected to spend more this year than last – with digital-savvy millennials and Gen Zers showing the greatest desire to increase their budgets. In fact, millennials are planning on spending 15% more this holiday season than the average consumer, and 25% more than baby boomers.
Deloitte Insights confirmed this growth trend and accentuated in their 2019 Holiday Retail Survey that all eyes will be set on digital growth. The smartphone use for holiday shopping is expected to rise 6 percent this season – with online retailers being the number one source of inspiration for most shoppers. In fact, Deloitte has forecasted retailers’ digital sales to be robust this holiday season, amounting to US$144–$149 billion. E-commerce sales are expected to grow between 14 and 18 percent, higher than the 11.2 percent in 2018.
“Our research suggests that two-thirds of consumers intend to begin their holiday shopping journeys at online retailers with few or no physical locations, including auction sites,” read the report. “Nearly the same number plan to use online search engines as their main source for research.” Overall, online purchases are expected to account for 59 percent of consumer holiday spending.
Interestingly enough, more than half of the holiday season shoppers also plan on doing in-store research and buying online. This consumer journey of mixing online and in-store for research, pricing, and comparisons is now commonplace, as consumers are taking advantage of quick access to products, reviews, social media, and seamless checkouts, likening smartphone shopping to a point-of-sale anywhere.
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And the online shopping trend does not come without challenges for retailers. “For the first time in our seasonal polling, online sales will surpass in-store,” stated Tim Cadogan, Chairman and CEO of OpenX. “And, to make things even more complicated, just as this shift from in-store spending to digital kicks into high gear, we’re also seeing dramatic changes in how consumers interact with the digital channels marketers rely upon to shape buying outcomes.”
The 2019 Consumer Holiday Shopping Report by The Harris Poll/OpenX actually reveals that the shift toward digital shopping is also impacting how consumers interact with the most popular shopping days of the year, Black Friday (November 29th) and Cyber Monday (December 2nd). On Black Friday, traditionally a day for brick-and-mortar, the number of consumers planning to shop online vs. in store is almost identical. On Cyber Monday, 70% of millennials plan to shop online, more than a 30% increase over 2018.
Cyber Monday is once again expected to be the biggest online shopping day in US history, with a total that could approach – or even surpass – $10 billion, while Black Friday should also rank among the leading days for the season. In this context, direct-to-consumer (DTC) products promoted via social media channels have become a popular gift item, and more than 20% of consumers plan to purchase at least one DTC gift.
At the same time, social media clicks don’t translate into purchases as easily as visits coming from other channels like email and search: 57% of consumers have received ideas for holiday purchases from social media, but only 20% of consumers have purchased a product based on a social influencer’s recommendation. In fact, socializing is also popular IRL: Deloitte noted a rise in consumer spending on entertainment and experiences, meaning that socializing away from home with family and friends is more common than ever. However, consumers remain price- and product-focused and – as always – love a great holiday promotion.
Photo Credits: Gucci