The holiday shopping season typically generates around 20 percent of the average retailer’s annual revenue, but 2017 is difficult to forecast. Consumer confidence has increased, but continued economic and political instability could dampen shopper enthusiasm.
In spite of potential instability, there are holiday shopping trends to expect as we move from Black Friday to year end.
Omnichannel Retailers Will Outperform Online-Only Stores
Total retail growth for the 2017 holiday season hovers at 2 percent, but eMarketer expects 15.8 percent growth in e-commerce sales. While e-commerce sales continue to grow, the winners of the 2017 holiday season will be retailers offering an effective blend of online and offline shopping opportunities as the in-store experience is still an important part of the equation.
Consider the facts: 60 percent of customers expect to start and finish orders on separate platforms, 64 percent of shoppers want to execute online orders from inside stores, and 35 percent of in-store shoppers started their search on Amazon.com. These stats show the fluidity of the customer journey from initial interest to purchase, and the importance of being available to customers in all channels.
An effective omnichannel strategy requires offering an integrated experience, from first touch to final sale to exchange/return.
One retailer effectively merging its online data and offline experience is Nordstrom. The upscale department store chain leverages Pinterest to better understand what merchandise shoppers want, then puts “top-pinned items” front-and-center in its stores.
Consumers Choose Customer Experience Over Savings
The holiday season is synonymous with big discounts, but this strategy can only succeed if retailers make up for lost profits by increasing volume — which is getting more difficult to execute as e-commerce channels can more easily undercut brick-and-mortar sales.
In 2016, the number of discounted items sold over Black Friday weekend rose 20 percent year-over-year, with an average discount of 44 percent. However, shoppers continue to report factors like product availability, quality, flexibility, transparency, convenience and service levels as more effective ways for retailers to differentiate.
For example, 63 percent of shoppers have said they would like to be able to use gift registries — e.g., Amazon WishList — to make it easier to find the perfect gift. Furthermore, busy consumers will wait until the last minute to shop, making options like one-day shipping and buy online, pick up in-store attractive.
Millennials Drive Experiential Spending
As millennials begin to flex their spending power, retailers will see their influence in a variety of ways, including the priority and importance this generation place on experiences over material things. Seventy-five percent of millennials say they would rather spend money on travel and experiences than goods.
This preference made a significant impact on 2016 holiday spending, as the average millennial budgeted almost $1,500 for holiday shopping, but spent the greatest amount of their budget, almost 25 percent, on experiences.
Savvy retailers can tap into their millennial customers’ needs for Snapchat and Instagram-worthy moments by creating better experiences in-store. A number of brands have had success using virtual reality, in-store entertainment and new technologies like humanoid robotics to enhance consumer experiences.
One retailer that does a good job creating experiential moments is Nike, which found success with its Nike+ Basketball Trial Zone. This interactive experience, which launched in Nike's New York SoHo store during the 2016 holiday season, allows shoppers to try on and then use virtual reality to “test” shoes by playing basketball at Brooklyn Bridge Park, or taking a run through Central Park.
The Bottom Line
The 2017 holiday season will bring a variety of surprises, but retailers that effectively blend the online and offline experience, make shopping fun and convenient, and capture the imagination of shoppers will win big. Retailers that embrace innovative solutions like interactive virtual reality window displays and humanoid robotic solutions will be more successful when it comes to turning window shoppers into paying customers.
Steve Carlin is the chief strategy officer at SoftBank Robotics America, the company behind the humanoid customer engagement robot, Pepper.
Related story: Adobe Predicts $13.9B in 2017 Holiday Online Revenue