With the current state of the economy and the holidays right around the corner, Americans are scraping together whatever money they have to purchase the perfect gifts for friends and loved ones. Last year, the pre-Christmas sales increase was the biggest in five years, with spending reaching approximately $584.3 billion, a rise of 2.8 percent, according to MasterCard Advisors’ SpendingPulse.
Holiday shoppers can rest assured this year knowing that the economy has improved over the past few years. In 2010, U.S. retailers' holiday sales in the 50 days before Christmas jumped 5.2 percent for the best performance in five years.
Though every organization that analyzes retail sales has a different formula, they all expect a rise of 2 to 3 percent in sales during the holidays in 2011.
“Retailers are optimistic that a combination of strong promotions and lean inventory levels will help them address consumer caution this holiday season,” says Matthew Shay, NRF’s president and CEO. “While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009.”
In reaction to the instability of the economy, many people are switching over to online shopping. According to the U.S. Census Bureau, over $30 billion of holiday sales come from electronic purchases via the Internet.
“Free shipping deals, convenience and more variety are just a few reasons why more consumers are opting to shop with their mouse this year,” says Charles Tran, founder of CreditDonkey. “Not to mention, there is no need to worry about traffic or the cost of gas and dining out when you shop online.”
U.S. online holiday shopping is becoming extremely popular, and is expected in crease 15 percent to nearly $60 billion this year according to Forrester Research Inc. The report claims about 58 percent of Americans are more price-conscious now than they were last year.
According to a recent study by the NRF, online holiday shopping has increased 15.2 percent in 2010 compared to 2009, with popular discount days being Thanksgiving and Black Friday. More than 40 percent of retailers said they plan to offer free shipping during the holidays, and FedEx expects to hit a record of more than 260 million shipments over the holiday season.
With price being the number one factor when it comes to consumers making holiday purchases, it is important for companies to recognize their competition and make their products affordable and appealing at the same time.
“Price is paramount during any recession, but when the economy begins to recover other factors take on greater importance,” said Phil Rist, executive vice president of Strategic Initiatives, BIGresearch. “When shoppers consider other factors like customer service and quality in buying decisions, retailers have the ability to highlight a variety of other features to help their company stand out from the competition.”
“I think shoppers are always looking for a deal,” said Lord & Taylor CEO Brendan Hoffman. “But I don’t think you’ll see super-deep discounts as compared to the last couple of years. The world’s gotten promotional over the last few years and will continue to be so this year, but probably not noticeably more than over the last few years.”
“We’re very encouraged and very confident about the holiday season,” said Macy’s spokesman Jim Sluzewski. “We’ve told Wall Street to expect our sales to be up 4 percent to 4.5 percent in the fourth quarter. That’s relatively consistent with the sales increase we’ve seen all year.”
This chart illustrates the average holiday spending by year, which shows a drastic decline from 2007 to 2009, and a gradual increase from 2010 to the current calendar year.
Not only are Americans changing where they shop, they are also changing how they shop, thanks to the popularity of smartphones such as iPhones and Androids. Many consumers are using their mobile devices to research gift ideas, compare prices and find items in nearby stores. According to the NRF, over one-forth of American adults with a smartphone will use these devices to research or make holiday purchases. Mobile phone retailers are planning to use this to their advantage by offering mobile apps with features such as mobile reviews.
With the holidays fast approaching, the NRF reports that over 37.2 percent of Americans had already begun their shopping by Halloween. The declining recession is certainly providing a glimmer of hope for shoppers as they plan out their gifts for friends and loved ones.
This video shows a glimpse of what is to be expected during the 2011 holiday shopping season.
rachel vargyai 