- Consumers are expected to spend 5 percent more this holiday season than last year, for a total of at least $717 billion.
- Retailers are delivering on demands for speed and convenience with expanded free shipping, curbside pickup, mobile checkout and app-based store maps.
- Brands are also experimenting with pop-ups, including online brands like Facebook and Wayfair.
Retailers face mounting pressure to provide faster, easier shopping experiences, and the holiday season makes that even more urgent.
November and December--especially the stretch from Black Friday to Christmas--is always a crucial time for retailers, and 2018 looks like an especially promising year for bottom lines. Economic growth is the highest this year that it’s been since 2005, and 43 percent of consumers said their financial situation is “a lot” or “somewhat better” than last year in a recent Deloitte holiday retail survey.
With that in mind, it’s not surprising 78 percent of Deloitte’s respondents said that during this holiday season, they plan to spend as much as or more than last year. A PwC study predicts shoppers will spend 5 percent more on holiday shopping this year compared to last. Unsurprisingly, e-commerce will account for a bigger chunk of the anticipated $700-plus billion consumers will spend in 2018’s holiday season. Research groups expect e-commerce sales to spike by 13.5-16 percent, totaling around $125 billion for the period.
And the early results are soaring past those expectations. Online sales climbed more than 23 percent year-over-year to $6.22 billion and likely spent another $3 billion on Saturday, per Adobe. Cyber Monday e-commerce sales should be even higher than Black Friday.
Retailers may sense these prosperous times will not last forever, and they’re breaking out new incentives and features for this holiday season. Many of the concepts focus on timeliness and shipping costs, two increasingly prevalent pain points for customers. This season, expect to see:
Fast, free shipping
Amazon recently announced all orders will ship for free, with no order minimum. Similarly, anyone who buys online from Target from Nov. 1-Dec. 22 will receive free two-day shipping.
Buy online, pick up in-store is not necessarily new, but big brick-and-mortar retailers like Macy’s, Kohl’s, Nordstrom and Target are placing a bigger focus on it. Target and Nordstrom customers can take advantage of curbside pickup and get their items without ever stepping out of their cars. These orders are usually ready within two hours of online purchase.
Last month, Target announced it was expanding its "Drive Up" service to 1,000 stores. (credit: Target)
The country’s largest retailer, Walmart, is trying to accommodate consumers’ dwindling patience. Walmart has become a far more digitally innovative company as it continues to challenge archrival Amazon, and this holiday season it’s rolling out mobile checkout, giving employees handheld devices that allow them to ring up items anywhere in the store. (Target stores will have this as well.) That should reduce lines and get people out the door faster when stores are the most crowded.
Walmart's "Check Out With Me" service is "designed to save customers time," per the brand.
Store maps for shoppers
In addition, Walmart’s mobile app now includes maps of every store so customers can easily find what they’re looking for.
Analytics for employees
Kohl’s is rolling out an Actionable Analytics program at 300 of its stores, giving managers valuable data on local customers, sales by item compared to similar stores and information about what customers in the surrounding area are looking for and purchasing online. This can help store leaders investigate, for example, why a product is not selling well at their store when it’s one of the most popular items at a location 20 miles away. It could also alert them that they may not have enough inventory of a certain item to accommodate the number of shoppers searching for it online.
Targeting underserved niches
Certain brands are in the unique position of capitalizing on the disappearance of their former rival. Earlier this year, Toys “R” Us closed all its stores, prompting Target to dedicate more space to toys in more than 500 stores. Target will have interactive displays for kids to try out toys and events where kids can meet characters and enter giveaways.
This year, Target is nearly doubling its inventory of "new and exclusive toys." (credit: Target)
Walmart is also getting in on the fun, increasing toy inventory by 30 percent and hosting more events for kids. Party City launched a new brand called Toy City, with about 50 temporary stores open across the country.
A handful of online-only brands are experimenting with pop-up stores. This holiday season, Facebook will have shops in nine Macy’s stores, primarily on the East and West Coasts, that highlight the products of 100 small businesses. Its displays are supposed to resemble a Facebook News Feed: There is no singular theme to the inventory, which includes everything from apparel to food to beauty products. Facebook is treating this strictly as a marketing opportunity for its platform and not taking any share of the revenue.
Facebook's pop-up shops within Macy's are meant to resemble a user's News Feed. (credit: Facebook)
It’s another experiment for Macy’s, which is trying out smaller “neighborhood stores” with dedicated space for online order pickups and giving other stores makeovers with new dressing rooms and Starbucks counters.
Online furniture company Wayfair is experimenting with temporary physical stores as well, with pop-ups in New Jersey and Massachusetts.
At Wayfair's pop-ups, home-design experts will be on-site. (credit: Wayfair)
Stuffed animal store Build-A-Bear Workshop will have pop-up shops in--of all places--Bass Pro Shops and Cabela’s stores as part of its Santa’s Wonderland experience. Kids can get a picture with Santa, do crafts and play games in these Christmas-themed displays.
Lululemon, meanwhile, has opened more than 30 “seasonal stores” nationwide. Based on their websites, many of the pop-ups are located in malls or shopping centers, opened between August and October and will remain open until February. Many offered complimentary workout classes during their opening weekends.
The bottom line
It’s clear that brands are trying to reach consumers in new ways and find ways to counter Amazon, which consumes about half of all online retail sales and counting. For years, retailers have talked about “omnichannel experiences” that engage customers, and we’re now seeing some of those efforts come to life.
This experimentation could result in very lucrative holiday stretch for both the old guard brick-and-mortar giants and newer online businesses.
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