The holiday season for shopping is drawing fairly rave reviews — which is impressive insofar as it is two weeks old. But a quick survey of the headlines leading into the season indicate that the mood is more or less upbeat, and the expectation is for solid growth.
But before handing out the party hats, we decided to check in with the experts at InfoScout to see if all the good cheer is indicative of a stellar season yet to come or perhaps just a bad case of the annual holly-themed hype. InfoScout — with its consumer pool of 300 or so Americans snapping pictures of their receipts and allowing their shopping data to be racked overtime — had a sober, but not not exactly sobering, split-the-difference kind of answer.
The good news, according to InfoScout CEO and cofounder Jared Schrieber, is that based on the trends of the two months running up to holiday 2016, there is every reason to bet it will be a solid season. The bad news is that all the headlines about it being a stellar season are exaggerating the situation a bit.
“I think we will see very small gains — 1 percent to 3 percent,” said Schrieber.
But the more interesting number isn’t the raw score, he noted, because those gains aren’t going to be evenly distributed at all. Online merchants on average will pick up 17 percent this holiday season. Brick-and-mortar commerce, on the other hand, he said, “runs a very good chance of contracting year over year. That won’t be sudden — it will be close to flat, maybe a little under. But all of the growth will really be in eCommerce. For physical retailers with an online presence, that does mean they will capture some of those sales. But overall store sales and same-store sales are not going to show and increase — physical retail is a less-than-zero sum game at this point.”
Schrieber also noted that eCommerce is a tricky space to evaluate with that 17 percent growth rate — since Amazon’s “gravity-defying” numbers have a tendency to skew the data and averages up. In reality, he said, a 17 percent growth rate for most physical players stepping out into eCommerce would be a very strong — bordering on amazing — result. Just flipping a switch into eCommerce has its challenges, and pursing that growth rate, especially while in-store sales seem destined to contract, requires more than just capacity.
Start Early, Stay Late
Holiday retail is spreading out consumers interestingly, Schrieber noted. Instead of big clusters on Black Friday, the spreading of the season is encouraging some shoppers to start early and others to procrastinate to a never-before-seen extent.
But while the longer season means there are shoppers in play for a longer time, whenever the customer starts, the smart money is on being the first merchant they visit. For two reasons.
First, “a lot of the big family household purchases happen early,” said Schreiber. “People get those out of the way early and save their buying for other people outside the household to later into the season. And those tend to be smaller items.”
The second reason is that customers literally spend most at the first store they go to — basket sizes are anywhere from $10 to $50 larger for the first shopping stop on a trip to the second one. And, Schreiber said, that can mean a lot of money for a retailer.
“For Walmart, that is the difference between when they were the first stop … at $68, and $36 if they were the second stop. That is a very big difference per basket.”
What’s Next
As is clear with the ever-proliferating month of Black Friday’s promotions already out in force, retailers are clearly looking to grab that first buy.
The good news is that the holiday season has probably gone as long as it can go — Halloween seems to act as a limiting boundary of the holiday season, and Schrieber noted that there has already been some moderate backlash for just how fast the holiday switchover has happened.
But the data doesn’t lie — and consumers’ mindsets do actually seem to switch over the minute those orange-and-black decorations go away. Customers are ready to shop, and since during the holidays he who sells first sells most, expect to see Black Friday starting November 1 for the foreseeable future.