2018 Holiday Shoppers Are Ready to Spend … On Their Terms

Almost 60 percent of shoppers plan on spending between $100 and $750 this holiday season, according to A.T. Kearney’s 2018 Holiday Shopping Survey, which polled 1,000 shoppers about how their 2017 experience would influence their spending in 2018. Interestingly, in what's perceived as a bullish consumer market, comparatively few respondents plan to spend more than they did last year, with about half saying they plan on spending about the same amount as they did in 2017. In fact, respondents told A.T. Kearney they're more likely to spend less than last year.

Seventy-three percent of respondents plan on doing some holiday shopping between Cyber Monday and mid-December, and 39 percent plan to do more than 20 percent of their total shopping during the period. While getting “the best deal” was the primary driver of respondent motivation (57 percent), practical considerations were right behind the hunt for that elusive biggest discount. Forty-five percent of consumers indicated they would shop early to avoid the rush and long lines. Thirty-four percent of respondents indicated they wanted to make sure their items could be delivered on time, and an equal number expressed concerns about avoiding potential out-of-stocks.

In-store and online retailers were the top-ranked shopping venues. More than three-quarters of respondents plan to spend at least the same amount this year in-store and on websites as they did last year. Almost half of respondents pick mass retailers like Walmart or Target as their top shopping choice, motivated primarily by low prices and wide selection.

Few respondents plan to do their entire shopping online. However, almost as many plan to shop both online and in-store (41 percent) as plan to do the entirety of their shopping in-store (43 percent).

Nearly three out of four respondents (73 percent) indicated they planned on purchasing apparel and footwear during the holiday period. In addition to apparel, the “Top Five Holiday Demand” category was rounded out by toys (57 percent); electronics (55 percent); home, kitchen and garden (49 percent); and beauty and personal care (47 percent).

Respondents reported having a wide variety of unsatisfactory in-store shopping experiences last year, including long lines (84 percent); aggressive crowds (67 percent); out-of-stock items (67 percent); and poor service (57 percent).

Over 60 percent of respondents said they're willing to change where they shop based on negative experiences last year, with long lines and out-of-stock issues the top drivers for switching behavior. Twenty-three percent of those surveyed indicated they will be shifting their primary buying online and/or mobile as a result of bad in-store experiences, while only 14 percent said they would shift their spending primarily in-store.

Online shoppers reported similar complaints when it comes to out-of-stocks, the largest problem respondents identified in terms of their 2017 holiday e-commerce experience.

That said, complaints were more common in-store vs. online for every major retail format, and shoppers said they were 65 percent more likely to report issues in-store compared to online.

So, what should retailers do to maximize holiday sales?

It all starts with atoning for the sins of 2017 by attacking those long lines and out-of-stock complaints through a combination of both human and operational remedies.

Low unemployment and increased job creation have created a very tight holiday labor market — in a year when retailers will be adding about 10 percent more holiday workers than they did in 2017.

It’s a tight labor market and retailers are doing whatever they can to attract talent. Amazon.com has been forced to raise its minimum wage to $15 an hour. Macy’s is offering seasonal workers a bonus program similar to what full-time staffers receive. And Target has set aside approximately $2 million for employee raffles and discounts. This year, Kohl’s and J.C. Penney actually began hiring seasonal workers as early as June. Still others like Walmart are again offering year-round employees extra hours during the holiday season.

Of course, there are also non-labor-based solutions for some of these issues. Automation and supply chain efficiencies can help offset the impact of labor shortages. For example, retailers might consider making self-checkouts available or increasing the number of self-checkouts in operation. Over half of respondents reported they're likely to use self-checkout terminals this holiday season. Target has also invested in automated cash counting machines, and Walmart has piloted automation for detecting out-of-stocks.

Whatever the remedy, the message to retailers is clear: Whether you address consumer concerns through human solutions or by designing technological workarounds, consumers are going to be more impatient and less forgiving than they were in past years.

And in a year when those shoppers have more money in their wallets and are more open to spending it, not giving them what they want could be a very expensive mistake.

Ryan Fisher is a partner in global strategy and management consultant for A.T. Kearney's consumer and retail practice, and lead author of the firm’s 2018 Holiday Shopping Survey.