Now that everyone is filled with Halloween sugar regret, it’s time to focus on something more positive. And right now, that’s the holiday retail outlook.
Both the National Retail Federation and the International Council of Shopping Centers are projecting healthy increases for the season—3.7% and 3.3% respectively. The Mintel Group is forecasting a 4.3% increase over 2014. And The NPD Group says positive consumer sentiment should boost shopper spend by 5 percent.
A number of factors are combining to spur positive consumer sentiment, chief among them long-term low gas prices that’s kept extra money right in consumers’ wallets. Additionally, inflation has remained unchanged for the last 12 months. The unemployment rate has steadily declined throughout the year and the number of jobless has decreased by 1.3 million, according to the Bureau of Labor Statistics. Add to that home prices that have recorded 4-to-5 percent increases year-over-year, according to the S&P Dow Jones Indices, and consumers feel comfortable with spending this season.
“Our projection is definitely very healthy,” says ICSC spokesperson Jesse Tron. “Hopefully nothing drastic happens in the economy that would derail it. But barring that, we could be on lower side with our projection and this could be a really good season.”
On average, holiday shoppers plan to spend $603 on holiday gifts, up from $589 in 2014, $508 in 2013 and $568 in 2012, according to the Cotton Incorporated Lifestyle Monitor Survey. More than eight in 10 holiday shoppers (86 percent) say they plan to spend more (22 percent, up from 16 percent in 2014) or the same amount (63 percent) on holiday gifts this year compared to last.
On average, holiday shoppers plan to spend $377 on electronics (up 1 percent from $374 in 2014), $225 on apparel (up 1 percent from $222), $194 on gift cards (up 12 percent from $173), and $169 on home textiles (up 48 percent from $114), the Monitor survey finds.
“One of most interesting trends to come out that our economist (Jack Kleinhenz) talked about heading into the holidays is athleisure,” says the NRF’s Kathy Grannis Allen, spokesperson. “He has expressed that athletic apparel trends will continue to make waves this holiday, especially among Millennials.”
Tron agrees, saying apparel will have a “nice little renaissance this year,” with apparel performing better than electronics. The ICSC expects clothes to see a 3.3% increase during the holidays overall, while electronics are expected to garner about 1.1%.
“Last year was strong for electronics, and the mobile phone has a lot to do with it,” he says. “But we don’t replace electronics as frequently. So we expect electronics to do really well on Black Friday weekend when shoppers do a lot of shopping for themselves, and apparel to do well the rest of the season.”
The large majority of consumers (80 percent) say they like to receive clothes as gifts during the holidays, the Monitor survey reveals. Gift favorites include wardrobe staples like tees (34 percent), sleepwear (29 percent), and jeans (25 percent), as well as cold-weather gear like sweaters (24 percent) and outerwear (23 percent).
More than eight in 10 apparel gift givers (85 percent) plan to spend more (23 percent) or the same (62 percent) amount on holiday clothing gifts this year compared to last year, according to Monitor stats. Half plan to purchase tees as gifts, followed by sleepwear (37 percent), jeans (35 percent), and outerwear (30 percent, up from 38 percent in 2014).
Apparel gift givers plan to purchase about two-thirds of their clothing gifts in-store and one-third online, Monitor stats show. Almost six in 10 will shop at chain stores (59 percent, up from 54 percent in 2014), followed by mass merchants (55 percent), department stores (47 percent), and online only sites (42 percent).
While 19 percent of shoppers expect to do all their holiday shopping online, the Monitor finds the rest plan to go to store locations. And while 64 percent say they prefer to shop for holiday gifts in stores because they enjoy the overall experience, retailers should be aware that most (75 percent) say they expect stores to have the same products in-store as they have online.
A relatively recent point of contention about holiday shopping surrounds stores that open on Thanksgiving Day. A survey from San Francisco-based RichRelevance found more than one-third of shoppers (38 percent) state they “hate” the practice and another 27 percent dislike it, while 13 percent “like or love” the practice. RichRelevance finds Thanksgiving sales may actually be cannibalizing Black Friday sales, as its survey found 61 percent of consumers say they will not shop on Black Friday if they shopped in stores on Thanksgiving Day.
Tron says the ICSC expects the majority of retailers to be open Thanksgiving, especially the electronics, department, and big box stores.
“Believe it or not, not everyone in America watches football, which sounds like blasphemy, I know,” he says, half-jokingly. “But for some people, the tradition is shopping. Our pre-holiday survey shows 8 percent said they would shop on Thanksgiving Day. It might sound like a small percentage, but it’s still millions of people.”
Grannis Allen says Thanksgiving has become an important shopping day for millions of Americans.
“Last year, 40 million people shopped online and in-store on Thanksgiving,” Grannis Allen says. “That was similar to the year prior. The reality is people have been working on Thanksgiving and Black Friday for years. We’ll see how it plays out this year.”
The Monitor finds almost eight in 10 holiday shoppers (78 percent) admit to buying items for themselves while purchasing for others.
“So there’s the potential to capture added spend on Thanksgiving, based on the fact that it’s not just about gifts.”
This article is one in a series that appears weekly on sourcingjournalonline.com. The data contained are based on findings from the Cotton Incorporated Lifestyle Monitor Survey, a consumer attitudinal study, as well as upon other of the company’s industrial indicators, including its Retail Monitor and Supply Chain Insights analyses. Additional relevant information can be found at CottonLifestyleMonitor.com.