2017: The Year Retail Got Its Experiential Act Together

Some things about holiday shopping trends will never change, Mastercard’s Sarah Quinlan told Karen Webster in their annual discussion of the trends to watch for the holiday season.

Women in 2017 will do the bulk of the family’s holiday shopping – to the tune of 75 percent. Men will pick up their remaining 25 percent at the last possible minute – this year, that will be either the Saturday before Christmas or Christmas Eve itself.

“A person can drop all the hints they want – this is never going to change,” Quinlan told Webster.

But in some ways, 2017 is a very different year than the last few, Quinlan noted – a much merrier and brighter year on the commerce front.

“When we look at the trends, it is not hard see why,” she said. “Unemployment is at 4.1 percent, wages are rising, consumers are confident – we are seeing that play out in the shopping picture this holiday season, as we would have certainly wanted it to.”

And such a show of cheer really is something of a holiday event, given that Quinlan’s official job at Mastercard is group head of market insights, but her unofficial title is “The Duchess of Doom.” She’s not known for putting an unnecessarily chipper gloss on the story of retail trends.

But 2017, she noted, shows signs of being a very merry one for merchants and the consumers who will be on the receiving end of the gifts bought in their stores.

Like last year, it will be filled with experiential purchases driving an impressive percentage of spend. But different than last year and the years before it, this time consumers will rediscover some of their lost love of buying goods.

“Goods are doing well, there is no doubt about that – and the amazing thing we are seeing this year is that effect is being felt online and in stores,” Quinlan said.

So, which goods are doing especially well – and which aren’t?

Apparel

In a turn of events that should be something of a surprise to anyone regularly watching the segment, November was the first positive month for apparel sales since April, according to Quinlan, who noted that a “lot of discounting” went into that result, as well as a stroke of good luck: In most of the U.S., fall was actually cold this year.

Quinlan said that pick-up in apparel has translated into better than expected results for department stores, which had their first positive month in November since last year’s holiday shopping season. She suggested that represents the beginning of a trend, one that should give department stores confidence that it will strengthen, especially as the end of the big online push draws near.

That push, she noted, begins to drop off around this second and third week of December, as customers become increasingly concerned about missing that Dec. 24 delivery window and being left empty-handed on Christmas morning.

But, Quinlan said, even that issue has gotten better, as online merchants have also learned to clear up their experiential act.

Getting Shipping Under Control

The increased migration to digital on display this holiday season, Quinlan noted, is consistent with the trends of the last half decade, and in that sense, isn’t surprising. What is notable, however, is the degree to which the online merchants are also streamlining and smoothing out their issues, particularly around delivery.

“As worried as consumers get, rightfully, about their goods getting there on time, we’ve also seen a really concerted effort around getting better at telling the consumer when they can get things there and setting expectations properly.”

Although that is helpful, Quinlan noted, what’s more interesting is how digital retailers have redefined the holiday consumer shopper persona. Bargain shoppers, Quinlan told Webster, tend to hunt online and make use of the entire shopping period.

Quinlan maintained that there really was no “Cyber Monday effect” that ring-fenced eCommerce, but rather a consistent and growing part of the online retail experience, especially as the mobile shopping experience has improved.

And if this is all sounding a bit too cheerful for the so-called Duchess of Doom, Quinlan had a surprise to offer for a segment that is not expected to perform as well this season: toys.

Kids Do Not Want Toys For Christmas

Forget what you’ve been told about kids wanting toys for Christmas, said Quinlan, after Webster noted that Mattel is already prepping investors for a weaker than expected fourth quarter.

“Kids no longer like toys. They truly want electronics.”

And, she noted, this is a particularly big year for electronics. Quinlan said there is a school of thought in retail that is mostly a myth: that consumers don’t buy apparel at Christmas because they buy electronics. As it turns out, consumer buy electronics all year long, but this year was a bit unusual.

Quinlan said that a few big releases, particularly with smartphones, really pumped up those sales – as did big discounting in November, which she said is unusual to see.

And those combined discounts and sales, she noted, pushed more consumer purchases.

Better luck next year, Barbie.

The Bigger Trends

For all the press that the resurgence of consumers buying products is getting, Quinlan said, the real thing to watch is the spike in experiential travel that is replacing products at holiday gifting time.

Quinlan observed that airline ticket sales spiked in November year-on-year – not an easy feat, given that last year saw a spike, too. She also pointed out that these sales aren’t necessarily people buying tickets to get home for the holiday, but rather gifts consumers are buying to give to one another.

“The thing that shows up most strongly year after year that we are examining is this ‘experimental’ core that is driving more and more of retail spending,” Quinlan remarked.

The other big (and hopeful) trend she’s seeing is the good old-fashioned focus on managing inventory, which has many retailers selling out of items well in advance of the season.

Quinlan said she’s long held the belief that the problem in retail isn’t really selling the merchandise, but getting it to move. Seeing sellouts and a greater emphasis on exclusive goods in limited supply is breaking consumers of the post-financial crisis habit of not buying today, since it will be discounted even more tomorrow.

All of this isn’t quite enough to declare that physical retail’s problem is over, Quinlan noted. But she is heartened that, at least so far, the trends of holiday 2017 indicate that retail is learning to adjust to the modern customer – and is getting better at giving them what they really want.