Deloitte: Consumers to up holiday retail spend in 2018

02 November 2018 4 min. read
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Deloitte’s 33rd annual ‘Holiday Survey’ forecasts total holiday retail sales to increase 5-5.6%, with online sales rising 17-22% in the 2018 holiday season. The average US consumer is expected to spend $1,536, with online purchases accounting for 57% of the total.

With 73% of US consumers upbeat about the economy for the coming year, respondents in Deloitte’s survey indicated that they will spend about $1,536 on average this holiday season – up from $1,226 last year. 78% said that they would spend more or the same as they did last year. As can be seen in the chart below, consumer sentiment is closely related to wider economic conditions – tracking to the Great Recession and subsequent boom times.

“Strong sentiment is a great start, but if you're a retailer, it doesn't guarantee a record season,” said Rod Sides, vice chairman, Deloitte, and U.S. retail and distribution leader.Most consumers plan to maintain or increase their holiday spending40% ($611) of holiday spending will go to ‘experiences’ – like socializing away from home and entertaining at home – while gift giving will account for 35% of the budget ($525). The most popular category of gift remains gift cards (54%), narrowly outstripping clothing (53%).  46% said they would buy games/toys as gifts, while 43% indicated books and 39% said they would gift food/liquor.

Online commerce will continue to grow in dominance this holiday season, with Deloitte expecting 57% of spending to be done online vs 36% in stores – a drop of 10% for store sales in the last four years. Online shoppers said they prefer ecommerce because of its convenience (77%), while over 70% mentioned free shipping and two-thirds identified time savings and home delivery. Meanwhile, those who planned to shop in a physical store highlighted the ability to interact with the product (60%), no shipping costs (47%), and inspiration for gift ideas (47%) as reasons for heading to a bricks-and-mortar location.Spending on experiences will grab most of the budgetDeloitte’s holiday survey finds that 60% of consumers will shop at online retailers/auction sites (up from 55% in 2017), while 52% will shop at mass merchants like Walmart and Target (up from 44% in 2017). Meanwhile, 32% said they would shop at traditional department stores, an increase of 4% from last year. It may be too late for Sears, though, which ended up filing for bankruptcy in October.

Promotions continue to matter for consumers, with 82% saying that they influence their holiday shopping. 95% said price discounts were the most appealing promotional offer, while free shipping ranked second at 75%.

“More than 80 percent of consumers note their shopping will be influenced by promotions. The deals are always attractive, but there are a lot of other points of inspiration that can drive the sale,” Sides commented. Free gifts were identified by 52% as an appealing promotion, while 32% selected loyalty points and 6% mentioned contests/games.Holiday shopper (un)decisivenessIn line with shoppers’ love of deals, 44% said that they would rely on Black Friday as they did in the past, while 53% said they would count on Cyber Monday for their holiday shopping. Retailers will see a traffic peak from November 16-30, as 72% plan to make purchases in this time span.

Meanwhile, the report reveals that 49% are undecided about what items they plan to purchase when shopping in-store or online. This means half of holiday purchased are open to retailer influence, according to the report, which companies can capitalize on by creatively presenting a variety of quality products at attractive prices.

“Respondents indicate they're shopping for a variety of reasons and occasions for themselves and others, and many shoppers remain uncertain about what they'll buy or where they'll buy it,” Sides added. “Consumers are making several stops online and in the stores along the way to figure it out. Inspiration and influence are the notes retailers should try to hit this year to stand apart from their competitors."