The Year-Round Race for Your Holiday Shopping Dollars
November 13, 2017
Big-box retailers increasingly push consumers to forget the date on the calendar and purchase school items, pumpkins and Christmas trees in the same shopping trip. Known as “Christmas Creep,” this early arrival of the holidays is a tactic retailers commonly employ in their race against time toward a profitable holiday season.
The Fall of Black Friday
More than half of holiday shoppers begin researching and planning their gifts by October, with one third even making purchases that early, according to a survey from the National Retail Federation, the largest retail industry trade association.
As much as 30% of a store’s annual sales can come during the holiday season, so stocking holiday merchandise sooner gives retailers a jump on the competition and extends the amount of time consumers have to buy, for good reason. Shoppers are expected to spend up to $682 billion this holiday season, but the longstanding kickoff to the holiday season is becoming a casualty of the longer sales cycle.
“Black Friday, as an isolated event, is becoming less and less important,” said Raymond James Consumer Analyst Budd Bugatch. “Stores are open on Thanksgiving now and start promotions online ahead of Black Friday.” Bad publicity from images of deal-hunting customers getting trampled or starting fistfights are likely also driving big boxes toward earlier promotions, Bugatch said.
It might also be driving more consumers to shop from the comfort of home. Although e-commerce’s share of 2016 total retail sales in the holiday-heavy fourth quarter was still just eight percent, that dollar amount has grown between 14% and 16% each year for the past decade. To big-box retailers, a customer “who buys online and in store is twice as valuable as a customer who does one or the other,” Bugatch said, and he believes retailers will expand efforts to court these dual shoppers who value saving both time and money.
Look for more retailers to offer in-store pick up of online purchases, which offers the convenience of online shopping and the benefit of immediately acquiring the item, two perks for time-pressed shoppers this holiday season.
Turning Time and Data into Dollars
Manufacturers in Far Eastern countries produce much of the world’s holiday decorations, Bugatch said. Many big-box retailers order ornaments, wreaths and other holiday décor in January to allow manufacturers enough time to make, package and ship the decorations, which arrive as early as July or August. The merchandise is quick to go on display to save storage space. Stores “can’t make money if it’s sitting in the warehouse.”
To make purchasing decisions so far in advance, retailers increasingly rely on big data to calculate what items will be the hits of the next holiday season. “There’s always some surprises due to fads, especially in toys,” Bugatch said, “but the better the data you have, the better you can predict” what will sell. “Stores don’t want to know specifically what you as an individual are buying, but rather what someone of your demographic, education background, etc.… is buying.”
Last-Minute Deals Possible
As the holiday season marches on, keep your eyes on the weather, especially in areas of the country prone to cold and snow. If bad weather keeps shoppers at home, expect retailers to make up for the lost time and sales by offering discounts, especially clothing retailers.
Without bad weather, “stores are not going to discount something someone is going to buy anyway,” Bugatch said. He cautions those who shop late in the season that waiting until the end might result in better prices, but maybe not a better selection. Plan your shopping calendar appropriately.
Content created by Raymond James for use by their financial advisors.