Coleman Chair Professor in Marketing at Mays Business School;
Director of Research, Center for Retailing Studies
Black Friday and Cyber Monday are only days away. So how does this year’s retail shopping season look? All estimates point to a bullish holiday season.
The National Retail Federation (NRF) predicts retail holiday sales to be $656 billion, the International Council of Shopping Centers (ICSC) projects them to be $684 billion; and Deloitte Consulting is even more optimistic, pegging sales at $1 trillion. Depending on the estimate, the expected growth rate over last year ranges from 3 to 4.4 percent. Retail holiday e-commerce is anticipated to range from $91.6 billion (Adobe Digital Insights [ADI]) to $98 billion (Deloitte Consulting). Much of the holiday shopping will come from a large number of shoppers making small purchases. An overwhelming majority of shoppers (78 percent) will be spending less than $1,000 during the holidays (Qualtrics).
With such optimistic growth scenario for the holiday season, retail sales around the Thanksgiving weekend are also expected to show close to double-digit growth. ADI expects both Black Friday and Cyber Monday sales to be around $3 billion each with projected growth rates between 9.4 percent and 11.6 percent. About 137.4 million consumers will likely shop during the Thanksgiving weekend (Fortune). 74 percent of all shoppers plan to shop on Black Friday, while 36 percent intend to shop on Cyber Monday (NRF). We have all heard of the 80/20 rule; 80 percent of spending comes from 20 percent of the shoppers. However, during the Thanksgiving weekend, the 35/5 rule applies—that is, 5 percent of the shoppers will likely contribute to 35 percent of the sales revenues (ADI). Amid this upbeat sales expectation, the most interesting trend is how shopper habits are changing. Roughly 62 percent of the shoppers compare online and offline prices (Qualtrics); 68 percent read online reviews before purchasing (Qualtrics); 85 percent plan to browse online before purchase (ICSC). In fact, digital interactions, whether they occur through a smartphone, tablet, or desktop, will likely drive 67 percent of all holiday sales (Deloitte Consulting).
We now live in a mobile-first world—more than 50 percent shoppers start their shopping journey through a mobile device. However, among the devices used to shop, desktop PCs still have the highest conversion rate. Albeit a meager 3.5 percent, it is about 2.7 times the conversion rate for smartphones (1.3 percent). A few trends point to a different Thanksgiving shopping weekend this year. Several predominant brick-and-mortar retailers (e.g., Nordstrom, Home Depot, Gamestop) will choose to remain closed during Thanksgiving day, putting their employees first and taking a cue from REI’s bold experiment last year. They will hope to make up for the opportunity loss in sales through greater employee motivation throughout the year and through online orders. However, retailers like Sears and K-mart, who depend on their customers to order and pick up at the stores, will face a new problem because they have shut down many stores. Further, with credit card chip readers not fully installed at all retailers (only about half of all stores have the chip reader), some shoppers may be wary that their retail credit card transactions may not be completely secure.
What items are likely to be hot during the Thanksgiving weekend and how are shoppers going to get their holiday gift ideas? As always, the iPhone is a coveted item (Qualtrics). Millennials are twice as likely to learn about holiday gifts from social media than baby boomers and Gen X’ers (Qualtrics). According to ADI, the top five holiday gifts in order of social media popularity are Pokémon Sun/Moon, Barbie, Legos, Oculus and PlayStation VR.
What are the best days for getting the best deals and on which items? ADI recommends:
- Nov. 22 for apparel
- Thanksgiving Day for jewelry, appliances, computers, tablets, TVs and sporting goods
- Black Friday for Christmas décor
- Cyber Monday for toys
- Giving Tuesday for furniture and bedding
The Thanksgiving shopping game is changing. There is something exciting for everyone. Whether you are a touch-and-feel shopper at a physical store, a desktop clicker or a mobile shopper, you have more choices than before. If you are a retailer, there is plenty to gain through omnichannel retailing. If you are an analyst and researcher like me, it is fun tracking, analyzing and predicting shopping behavior and shopper marketing.