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2017 Holiday Season Presents Mixed Bag for Retail Sector

October 27, 2017, 07:06 AM
Filed Under: Economic Commentary
Related: Deloitte, Retail

Consumers are heading into the holiday season with robust purchasing intentions, but retailers can expect a diverse mix of spending -- including a continued transition to online shopping and a shift away from traditional product buying, according to Deloitte’s 32nd Annual Holiday Survey of consumer spending intentions and trends.

Gift spending intentions remains stable compared with last year, averaging $430 among survey respondents. However, roughly one-quarter of respondents say they plan to gift "experiences — such as concert tickets, vacations and dining out (27 percent) — or plan to host and attend holiday events with friends and family (24 percent), instead of a traditional gift exchange."

Healthy spending intentions coincide with a rosier consumer outlook. Roughly 8 in 10 (81 percent) of respondents say their household financial situation is the same or better than last year, up from 63 percent five years ago.
Online spending surges ahead of in-store after equally sharing shoppers' dollars in 2016

Survey respondents intend to spend 51 percent of their budget online, compared with 42 percent in-store. In last year's survey, online and in-store comprised an equal share, at 47 percent each. Until this tie in 2016, people planned to spend more in-store. Higher-income households are even more inclined to buy online: Those earning $100,000 expect 57 percent of their spending will be online, and 39 percent in-store.
Online destinations are also widening the gap among places consumers plan to shop for gifts. This year, 55 percent of respondents plan to shop online for gifts, increasing its lead over mass merchants at 44 percent. Department stores are a distant third at 28 percent, down 3 percentage points from last year.

When shopping on a smartphone, more people are inclined to use dedicated retailer apps or payment apps when making purchases. Roughly 1 in 5 (22 percent) of respondents using smartphones for holiday shopping think they'll pay for purchases in-store with a mobile wallet app. However, nearly twice that number, 40 percent, anticipate using a retailer's app on their smartphone; and 36 percent plan to use a mobile payment app during the holiday season.

“The amount people are actually spending on gifts remains steady compared with prior surveys, but we’ve watched the mix of total holiday spending shift incrementally over the last five years,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail, wholesale and distribution leader. “It’s the lure of shopping and the experience that is flourishing and likely to remain in high demand — all which bodes well for retailers that have created an experience blending one-of-a-kind items, inspiration, uncomplicated navigation and frictionless transactions”.

“Whether a retailer is online or store-based, their digital influence is one of the strongest cards to play this holiday season. Even though 80 percent of people said they expect the majority of their shopping will fall in late November onward, decisions about where they’ll shop and what they buy will be largely determined by the digital interactions occurring now. In the survey, we found that retailers have a 75 percent probability of converting a desktop or laptop shopper to a purchaser along with a 59 percent probability of converting a smartphone shopper.”

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