Holiday Forecast Looks Bright

Consumer enthusiasm for Black Friday shopping hits eight year peak and holiday gift purchases are expected to average $718, according to new findings from Accenture. In the company's annual holiday shopping survey, amid signs of increased optimism about their personal finances, one-quarter (25 percent) of U.S. consumers plans to spend more on holiday shopping this year compared to 20 percent in 2013.
 
The survey also found  that two-thirds of respondents (66 percent) said they are likely to shop on Black Friday, compared to 55 percent who planned to do so in 2013 and 44 percent who said the same back in 2007. In addition, 37 percent plan to shop online during that period using a desktop, mobile device or tablet, which is up from 32 percent in 2013. Plans to shop on Thanksgiving Day and evening rose to 45 percent from 38 percent in 2013. Of those consumers planning to shop on the holiday, 47 percent said that they will be shopping in a physical store between 6 PM Thanksgiving Day and 5 AM on Black Friday.
 
The Accenture Holiday Shopping Survey found that of those consumers planning to spend more this year, 28 percent said they have more discretionary income and 22 percent noted that they have greater job security, up from 15 percent in 2013. Additionally, consumers are planning to allocate a greater share of wallet to holiday shopping than in previous years. For example, of those planning to spend more this year, 47 percent plan to spend $250 or more compared to 40 percent in 2013. Of the 19 percent of consumers who plan to spend less this year, 41 percent said they will reduce the amount they spend by less than $100.
 
Even though they intend to spend more, holiday shoppers remain keenly focused on discounts and sales. Nearly all respondents (96 percent versus 94 percent in 2013) said that discounts will be important to their purchasing decisions, and more than one in four (29 percent) said that it would take a discount of 50 percent or more to persuade them to make a purchase.
 
Retailers could also see a shift in sales in the post-holiday season this year, as more than half (57 percent) of consumers plan to purchase gift cards (the top item on consumers’ shopping lists) this year and 17 percent will use gift cards to do their holiday shopping, up from 10 percent in 2013. For example, a gift card may prompt additional sales when the card is redeemed since it is likely that the recipient will spend extra money to buy an item of greater value, versus leaving a balance on the card.  Moreover, by offering an incentive for holiday gift card buyers to make additional purchases or to enroll in their loyalty card program, retailers might be able to convert holiday enthusiasm into a brand relationship that extends throughout the year.
 
“The holiday shopping season is one of the most competitive times of the year for retailers, but they also have a big opportunity to drive sales and acquire new customers,” said Dave Richards, global managing director, Accenture’s Retail practice. “The majority of retailers look for ways to extend the holiday season as late as possible, but can face challenges in delivering a physical product in time. Personalized promotions and pushing gift cards are a good way for retailers to continue momentum and stretch this success into the post-holiday season.”
 
In other shopping news, the International Council of Shopping Centers (ICSC) forecasts a 4.0% increase in sales during the November-December holiday shopping period, the strongest gain in three years. Total holiday shopping sales at shopping centers is estimated to be $488.6 billion in the same period.
 
A significant rebound in the U.S. labor market since last spring, along with decreasing unemployment rates and year-over-year gains in personal income, all bode well for consumers and point to a likely solid increase in holiday spending.  Also, despite a setback in September, consumer confidence in the U.S. remains considerably higher than during the same time last year.
 
“While consumers are expected to remain focused on price this holiday, the positive momentum of key economic indicators are pointing to consumers who are willing to open their wallets and hit the stores this holiday,” said Jesse Tron, spokesperson for ICSC.
 
Holiday hiring, another strong indicator of holiday sales, is forecasted to be up with seasonal employment at shopping centers expected to rise by 7.3% to 794,258 jobs.