NRF: Holiday spending expected to rise slightly

By Kathy Grannis Allen

National Retail Federation

November is here, Starbucks’ red cups are back and the holiday season is well underway. Every year, the National Retail Federation unwraps its holiday spending surveys with fervor, digging until we find the most interesting takeaways for consumers, retailers, the media and other industry aficionados.

Here’s a look ahead at what’s top of mind for us this year, and what retailers can be thinking about when it comes to the $630 billion season ahead.

Holiday spending will be comparable to last year, and that’s good news. Retail sales are expected to rise 3.7 percent and consumers plan to spend an average of $805 on holiday merchandise, similar to the $802 they spent last year. Considering the economic forces at play, retailers are optimistic that we will see healthy holiday gains.

Considerations for retailers: The competition sizzles every holiday season, and though price is still paramount for many holiday shoppers, so are options that save time and provide value. Promotions like a gift card with purchase resonate not only with bargain hunters but also with loyalists, which is why retailers like L.L.Bean have offered this perk in the past. Added value can also take the form of complimentary gift wrapping or “rainchecks” for sold-out items. Target recently announced its holiday marketing plans, which include price-matching and free shipping, as well as an interactive storybook narrated by Neil Patrick Harris and “Wonderpacks” activity kits for kids and their families.

Digital shopping: It’s what’s in store. There’s no question that consumers have become more reliant on digital shopping. Whether it’s “buy online, pick up in store” services or same-day delivery options, consumers have their choice of instant gratification when they shop online. And this season, nearly half (46%) of holiday browsing and buying will take place online, so retailers will benefit from placing those omnichannel offerings front and center both online and in stores.  

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Considerations for retailers: Retailers that offer omnichannel services should make sure customers know about it — these promotions are a huge hit with consumers young and old. And don’t forget about shipping: 47 percent of holiday shoppers tell NRF they rank free shipping or shipping promotions as a key factor in deciding where to shop during the holiday season. Best Buy got a head start on this idea when the company announced in October it would offer free shipping all holiday season long, and companies like Crate and Barrel promote in-store pickup options on product pages.

THE BIG WEEKEND

The reinvention of the biggest shopping weekend of the year.An estimated 134 million people shopped online and in stores over Thanksgiving weekend last year. While that number seems high, it was actually down from the previous year’s estimated 141 million. NRF President and CEO Matthew Shay noted the shift was a direct result of an improving economy, early holiday promotions and a growing demand for online shopping. What does this mean in terms of the future of the year’s biggest shopping weekend?

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Considerations for retailers: We know Black Friday isn’t dead, it’s just different. For the millions of Americans who want to shop on the day after Thanksgiving, there won’t be a shortage of online or in-store deals, even if a few retailers take the day off on Black Friday. One thing probably won’t change, and that’s the idea of self-gifting: 77 percent of holiday shoppers bought a non-gift item over the holiday weekend last year, and we’ve already learned that the average shopper this year will spend more on these self-indulgences. Give these shoppers what they want — more ways to find items they don’t have to wrap for anyone else.

MORE TRENDS TO WATCH

I’ve been covering and speaking about holiday trends for NRF for the past 10 years, and can easily say the only thing to expect each year is something new. Here are a few additional trends I’m excited to watch as the season unfolds.

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Omnichannel Millennials: NRF’s latest survey found 17 percent of 18-24 year olds and 16 percent of 25-34 year olds plan to take advantage of retailers’ same-day delivery options, significantly higher than other age groups. How will the demand for instant gratification hold up against resources to get those products delivered?

Spending on gifts for family members: We already know that “me, myself and I” are on holiday gift lists, but our October consumer survey also found that spending on family members is expected to grow. I’m left wondering what my husband will surprise me with this year!  

The season’s hottest toy: Will Disney’s “Frozen” toys stay on top, or will “Star Wars” emerge as the winner this year? I personally cannot wait to see Harrison Ford in action again as Han Solo.9