Tom: What’s expected for the retail sector during this holiday shopping season?
Mellody: That is the big question, Tom. Overall, the retail sector has had a tough fall, with sluggish sales numbers emerging in recent months, and inventories building up as a result. But, people have already been shopping and are expected to spend more than they did in 2014.
The National Retail Federation’s latest survey on holiday spending found that holiday shoppers plan to spend an average of $463 on family members, up from $458 last year and the highest in survey history. Average spending per person is expected to reach $805. So it does look like it will be a good season.
One thing that we can be certain of – online shopping is emerging as the story of this season. The same NRF survey found that Americans plan to do almost half of their holiday shopping online this year, and one in five of those who own smartphones will use them to purchase holiday merchandise, the highest since NRF first asked in 2011. This could very well be the year that online retail becomes the dominant first option for American holiday shoppers.
Tom: With all of this online shopping, online retailers like Amazon are poised to see a big season, right?
Mellody: If 2015 is the year that online shopping emerges as the primary story in holiday sales, it may also be the year that Amazon becomes the dominant company of the season’s retailers. According to a recent Reuters/Ipsos poll, a majority of U.S. consumers plan to go to Amazon.com for most of their online holiday shopping.
The survey found that 51 percent plan to do most of their online shopping at Amazon this holiday season, compared to 16 percent at Wal-Mart, 3 percent at Target and 2 percent at Macy’s. Not only does this underscore how synonymous Amazon has become with online shopping here in the U.S, but it also shows what an uphill climb traditional retailers are facing when it comes to e-commerce. While e-commerce still represents a small percentage of retail overall, Amazon is clearly outpacing everyone else, and this holiday season will be no different.
Tom: What does the shift to online mean for traditional retailers?
Mellody: Companies are really trying to keep up with the move to online, and I have talked about some of the shift to omni-channel retail before. Yet some businesses have been more successful than others, and it can mean success or failure in the holiday shopping season. For some retailers, like small businesses, the holiday shopping season continues to be the period that makes or breaks their whole year. But this is also true for some larger, traditional retailers this year. Who are they? One group that falls into this category is the department stores.