In 2017, retailers saw an 18% year-over-year increase in revenue during the holiday shopping season – including e-commerce, mobile and brick-and-mortar purchases. With many retailers outperforming expectations this calendar year, there is real opportunity to see even more growth from Thanksgiving through the New Year.
The 2017 Holiday Shopping Season: A Retrospective
Last year, 174 million Americans (more than half the population) went shopping at some point between Thanksgiving and Cyber Monday and spent an average of $335 per person. And while a lot of Americans trekked out to stores to get Black Friday weekend deals, many chose to shop from their couches. On Black Friday 2017, mobile sales dominated all e-commerce purchases, accounting for 64% of online shopping. Online purchases overall hit $2.6 billion.
Although online sales continue to rise each holiday season, it doesn’t seem to deter people from the age-old ritual of visiting stores to get holiday deals. In fact last year, only 9% of Americans shopped exclusively online during the holidays. Moreover:
- 16% Reported shopping entirely in-store.
- 29% Shopped mostly in-store and ordered a few things online.
- 20% shopped mostly online and bought a few things in-store.
- 26% divided their shopping equally between online and in-store.
The moral of the story is consumers like to have options and prefer an omni-channel experience.
What to Watch This Holiday Season
So what can retailers expect from shoppers this holiday season? Despite the best modeling, it is always difficult to predict human behavior but many retailers are banking on the omni-channel experience to win again this year.
Amazon Came to Play: As usual, Amazon is bringing out the big guns this holiday season. They have eliminated minimum free shipping requirements for millions of items, they have created a printed toy catalog reminiscent of decades past, and they are opening pop-up shops around the world in spaces abandoned by other retailers.
Kroger And Toys ‘R’ Us – Ghosts of Christmases Past: Toys ‘R’ Us is being revived this year in the form of pop-up shops inside Kroger supermarkets. The shops will carry exclusive products under the Geoffrey’s Toy Box Label—toys that shoppers will not be able to find anywhere else.
Skip The Line at Target: What’s the biggest complaint of in-store shoppers during the holiday season? Lines. Target is aiming to ease that pain by rolling out “skip the line” checkouts at all stores. Store associates can scan items with handheld devices anywhere on the floor and the customer can pay the associate on the spot with a credit card. Target has also expanded free two-day delivery for e-commerce shoppers to directly compete with Amazon.
Consumer Spend Will Hit Record Highs: Average consumer spending is expected to top $1,000 per shopper this year, up 4.1% from last year. The National Retail Federation predicts the total spending will range anywhere from $717 billion to $720 billion.
Be Sure to Track The Right Data
As shoppers begin their holiday search for the best deals, it’s important for retailers to know which metrics they should keep an eye on in order to measure success. Critical KPIs to watch:
- Gross Profit Margin: This is always a critical metric, but it can get lost in the hype of the holiday season. However, it is necessary to keep an eye on gross margin to understand how shipping costs or discounts may impact profitability.
- Average Order Value (AOV): AOV, the average dollars customers spend at checkout, can provide valuable insight into purchasing behavior.
- Traffic Sources: Dig deep into the platforms that direct not just clicks, but conversions to truly understand which investments are yielding ROI.
- Conversion Rate: Conversion rate goes hand-in-hand with traffic sources and is an indicator of whether you are targeting the right audience and providing a positive customer experience.
- Cart Abandonment Rate: Abandoned online carts mean abandoned dollars. Keeping an eye on abandonments can help identify hang-ups in the checkout process and can provide sources for re-targeting customers to motivate them to complete their purchase.
Putting It All Together
Retailers know they must fight tooth and nail to win holiday shoppers, but discounts and deals alone won’t truly lift sales or positively impact profits. Evaluating holiday season success requires not only the right approach, but also the right analysis. Knowing what works to attract your ideal customer, understanding what motivates them to spend more, and knowing which metrics to track will ensure an accurate assessment come 2019 – and will provide solid foundations as planning for next year begins.