Three Key Trends Driving Retail This Holiday Season
It looks like it's going to be a happy holiday season for retailers. A Cushman & Wakefield report says sales are expecting a 4.1% boost during the most wonderful time of the year, thanks to economic factors like lower gas prices and better employment rates. We can also expect to see roughly 825,000 seasonal jobs. So with that exciting news, here are the three key trends driving retail this holiday season.
Show Me the Money!
Consumers are planning to spend just as much if not more than in 2014. A survey by the NRF reveals shoppers plan to spend an average of $463 on family members, the highest amount in the survey's history. They also plan to spend a lot on themselves, projecting an average budget of $805 total per shopper. This is good news for department stores, which get nearly 24% of their earnings during the holiday season. And jewelry stores benefit even more, getting 28% of their sales during the season. In fact, 26% of all wedding proposals are during the holiday sale season. And here's a random fun fact: 40% of dog owners plan to spend more on holiday gifts for their dog than for their in-laws. But shhh...don't tell the in-laws.
Online and mail order channels can expect an 8.5% to 9% increase over the holiday season, with projected sales for Cyber Monday at $2.4B—a 17.6% increase from last year. And while 90% of retail sales still occur in stores, online and mobile engagement plays a big role in generating those sales. It's expected that 64% ($434B) of in-store sales will be the result of digital interactions. In fact, almost 80% of shoppers say they engage with the retailer digitally before entering the store.
A Rebounding Economy
Why are American consumers so confident to drop some dough this holiday season? There are a number of factors, including a better labor market. The unemployment rate is down from 5.9% last year to 5.1% this year, and we've added 2.751 million non-farm jobs since last October, clocking an average of 229,000 new jobs a month over the past year. On top of all that, gas prices are down and home values are increasing, which makes Americans feel safe to spend.
And it's a good thing shoppers are in the spending mood, because they'll have two extra shopping days between Thanksgiving and Christmas Eve, plus more stores will be open on Thanksgiving. (Yes, the "Black Friday Creep" is yet another thing to be thankful for if you're a retailer.) However, retail is still expecting a smaller boost from last year's 5.2% gain, simply because we're still recovering from the side effects of stagnant income growth in Q1.