What Retailers Can Expect This Holiday Season

Click here to view original web page at www.mytotalretail.com
Credit: Getty Images by skynesher

Holiday spending forecasts are predicting a robust season for retailers. Spending is projected to increase online and in-store and across all major categories. The booming economy is helping with the healthy growth, and there are other factors that are pointing to big gains for retailers this holiday season. According to NetElixir's holiday forecast, e-commerce sales will increase 15 percent year-over-year, up from a 13 percent gain last year.

Two big factors in our analysis are year-over-year e-commerce growth and back-to-school sales. This year, we found that the first half of 2018 has been strong, with a roughly 17 percent increase in orders and 15.5 percent increase in revenue for the first half of 2018 over 2017. Back-to-school e-commerce sales were also strong, increasing 14 percent from 2017.

Prices Decrease, But Orders and Revenue Increase

This year we broke down our forecast by specific retail categories and calculated the gains they can expect for revenues, orders and average order values. Our analysis uncovered an interesting predicted trend of decreasing prices for individual products, yet overall gains for retailers. According to the forecast data, revenues and orders will rise, with apparel and shoes seeing the biggest gains, while average order values are projected to be relatively flat or even decrease slightly.

These numbers paint an interesting picture for retailers’ online strategies this holiday season. Big retailers like Amazon.com driving down prices, especially in categories like apparel and shoes, might not mean losses for retailers. Rather, the lower prices might mean that consumers will buy more.

We believe this to be the case because this is a trend we've observed throughout 2018. In our analysis of discounted product prices, we saw that larger retailers have been offering deeper discounts, especially around key holidays. While this has led to a lowering of average order value, there has been an overall positive impact on total orders led by an increase in number of shoppers as well as frequency of purchases per shopper.

Changing Consumer Behaviors

Our holiday forecast also examined changing consumer purchasing behaviors and their impact this holiday season. Continued mobile commerce growth is a huge factor. We project that over 42 percent of all online purchases will be completed on mobile devices this holiday season. Whereas previously such a statistic was worrisome to retailers because consumers tended to spend less on mobile, our data also shows that the average order value gap between desktop and mobile is narrowing, which means that increased mobile commerce doesn’t mean lower spending. Consumers are becoming much more comfortable making big purchases on their mobile devices.

The biggest takeaway for retailers is that mobile is a necessity, and they should be actively working to create easy-to-use mobile sites as well as robust mobile marketing strategies to capture consumers shopping on their phones.

Voice search-led shopping is an emerging consumer behavior that's starting to have a big impact as well. Our data indicates that over 30 percent of all mobile searches are expected to be voice activated this holiday season. Voice search is converting the “search-shop-buy” consumer purchasing path into just a “search-buy” path, especially for staple purchases, which is also leading to an increase in the frequency of online purchases.

Retailers may wonder how these new ways of shopping are impacting the peak buying periods for the holiday season. In our forecast, we examined when retailers are likely to see sales spike. Holiday gifting-related search queries picked up from Sun., Oct. 21, and we anticipate three peak online shopping periods for this year’s holiday season:

Amazon

On the minds of any retailer is Amazon and the impact it will have on this holiday season. We project that Amazon’s share of holiday spending will continue to increase, taking 40 percent of holiday sales this year, up from 35 percent in 2017. This percentage equates to $38.8 billion in sales this year. Compared to the $29.4 billion Amazon generated in holiday sales last year, this year will mean an increase of $9.4 billion. All other retailers combined are projected to make an additional $3.6 billion in holiday e-commerce sales this year.

The growth of Amazon is yet another reason for retailers to take their mobile strategies very seriously. Consumers are certainly incentivized to shop on Amazon for its convenience, but that doesn’t mean that they won’t shop elsewhere. In fact, consumers are showing an interest to return to their favorite retailers. However, consumers don’t have patience to complete a purchase if the online shopping experience is cumbersome.

This holiday season is projected to be one of the best in recent years. However, it’s clear from the data that consumers are changing the way they shop for gifts. Retailers need to shift their strategies to ensure they reap the season’s benefits.

Udayan Bose is the CEO of NetElixir, a retail search marketing agency.

Retail Marketing Leaders Trend Report: The Top Online Performers and Strategies in 2018.
Dive into the strategies used by leading brands who own key market share on Google. This report breaks down the details around the retail customer journey, mobile search and key subcategories, and showcases the insights and strategies behind those successes.