Retailers this year have much to cheer. This holiday season sees a much-improved economy that should put gains this holiday season above last year by at least a percentage point. The National Retail Foundation and major retailers are forecasting traditional channels to show a 3-4% gain. But the real growth of course is in digital channels — which for the first time really must include mobile — where growth is expected to be in double digits, in the low teens.
While clothing and gift cards likely remain as the top gift categories showing some bend towards the “practical” and, to some extent, “safe choices,” two important issues are “buried” in the overall positive outlook for holiday shopping.
Mirroring the increasing gaps in income distribution, the recovery has been greater for those at the higher ends of the economic spectrum than the lower end. This has implications for retailers and their suppliers. Consumer electronics will do well, as the affluent consumers stock up on the latest gadgets from Phablets to wrist-worn tech (even if the Apple watch isn’t on sale by the holidays fitness trackers/bands). This category receives a boost as parental resistance to the two new gaming consoles has likely waned. Overall, higher-end retailers will outperform lower-end retailers with Target still struggling to regain its mojo, and Wal-Mart showing the effects of catering to less affluent consumers.
Best Buy remains a perennial question, especially after last year’s disappointing holiday results. Perhaps Best Buy is adapting itself better to e-tailing than other brick-and-mortar stores. Both their in-store pick-up option, which has been around at least five years, and their well-executed Web site attest to that. They have managed to wring profitability out of lower sales, and with the iPhone and new gaming consoles Best Buy should mirror broader retail, but not e-tail, holiday sales trends. Surprisingly they (along with Wal-Mart) elected not to support Apple Pay, likely more an indicator of reluctance to spend money on a new system than a reluctance to participate in all things mobile.
Regardless of where they buy, digital tools are now a mainstay of how most people buy.
Consumers plan their shopping trips by what they see online and, increasingly, will be able to subscribe to mobile services that alert them to specials based on their specific location. The new marketing buzz-phrase is “omni-channel.” Retailers now have to be in all places at all times, but “omni-channel” doesn’t portend any great changes from what we have seen in the past few years. While Amazon creeps into the physical retail world, and Wal-Mart continues to stumble into the e-tail world, consumers will remain multi-channel or, perhaps more accurately, “channel agnostic.” This year more than ever, consumers are looking for retailers to provide the best deal possible, whenever and wherever they want, in the most convenient way possible.
Clearly, consumers are demanding retailers to more closely coordinate their traditional advertising, online communications, merchandising and pricing together—and quickly. These “channel agnostic” shoppers increasingly are combining both digital and in-store experience leading to a more thoughtful search and buying process that no retailer wants, nor can afford, to miss.
Digital also feeds into a phenomena we also sometimes forget: it is not just the “get” that matters, but the “getting.” Many consumers actually love the “hunt” of getting the best deal possible, and the excitement that goes with it. This ensures that events like Black Friday and Cyber Monday will continue to be biggest shopping days of the season. That mob of people is something a good many people just won’t pass up. However, instead of a folder of newspaper flyers (remember those?), we now load our shopping calendar onto our smart phone, mapping a strategy that leads to our personal shopping victories. For example, Target announced its “wish list app” on Oct. 22, and continues with Cartwheel, delivering daily deals to a self-reported 10 million customers. Additionally, those daily deals from Amazon, that so many find sublime, has Amazon optimistic, hiring 80,000 seasonal workers, up 10,000 from just last year.
So, what is really going to happen this holiday season? Those retailers, marketers, app developers and posters (Facebook, Twitter, even blogs) that give consumers what they want are the ones that will see the greatest results. The right communication, in the right medium, delivered at the right time is going to be received, and perhaps acted on. It is not about what firms do, in this age of consumer-centricity it is about giving consumers what they want.
So this holiday season, watch for the agnostics, they could be the key to retailers’ success this year.