There’s a perfect storm brewing for the upcoming holiday selling season.
But this one, fueled by low-unemployment, rising income, high consumer confidence and a tech-hungry shopper, promises to rain down record sales this quarter.
First the macro view: According to digital market research firm eMarketer, America’s retailers are poised to pull in their first $1 trillion holiday season. That’s a 5.8 percent increase from last year, and the biggest jump since 2011, the company projected.
Driving the increase will be a 16.6 percent spike in online sales, to $123.7 billion, or about 12.3 percent of all holiday sell-through this year. Mightier still will be mobile sales, which will grow to nearly 44 percent of all e-commerce activity this quarter, and 5.4 percent of the total holiday take.
But fret not brick-and-mortar retailers; though your share of glad tidings is slowly dwindling, you still claim, at 88 percent, the overwhelming majority of holiday business.
“While e-commerce will continue to see strong double-digit gains, brick-and-mortar retail should be a particular bright spot this holiday season,” said Andrew Lipsman, principal analyst at eMarketer. “Not every brick-and-mortar retailer is thriving, and several have shut their doors this year, but others are really capitalizing on the strong consumer economy. Retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, pick up in-store.”
That’s certainly the case at Walmart and Target, which are working overtime to make it as easy as possible for shoppers to blow their holiday budgets. This season, both chains are equipping sales associates with hand-held mobile scanners and deploying them to heavily trafficked areas within the stores, so customers can avoid the checkout lines and pay for their purchases right there on the sales floor.
Watch: Walmart Rolling Out Mobile Checkout
And taking a cue from Target, Walmart has added a store map feature to its mobile app, to help customer find the exact location of items.
Even the Grinch that is tariffs has been tamed, eMarketer said, at least for the quarter, as retailers have built up inventories in anticipation of price hikes, and won’t likely pass those along until 2019.
And the icing on the cake: a favorable holiday calendar that this year brings the maximum number of days — 32 — between Thanksgiving and Christmas.
That’s not to say merchants can rest on their holiday laurels. Given the growth in online sales, the battle will be pitched this season for the digital purse. “For retailers, it will be a battle for e-commerce market share,” said eMarketer forecasting analyst Cindy Liu. “We should expect more promotions and perks like free and fast shipping, as retailers compete against Amazon.”
See: Dialing Up Sales In-Store
We should, and they did. Target has removed the minimum purchase requirement for free two-day, no-fee shipping through Dec. 22, a first for the chain, covering hundreds of thousands of items that would otherwise require a $35 minimum purchase.
For its part, Walmart is adding millions of third-party marketplace items to its two-day free shipping offer, although the discounter still requires a minimum purchase of $35 to qualify. It’s also loading up Walmart.com with more than 2,000 additional brands, including premium consumer tech like Sony’s once off-limits XBR TVs.
Not to be outdone, Amazon, the granddaddy of e-tail, is extending free shipping with no minimum purchase to all customers, not just Prime members, on hundreds of millions of items up until the Christmas ship-date cutoff.
But besting them all is Best Buy, still the reigning CE retailer, which is offering free shipping through Christmas Day for all products purchased online, no exceptions, and same-day delivery seven days a week for select items in more than 40 major markets.
See: Walmart & Target Up The Shipping Wars Ante
Speaking of electronics, tech is the fourth most popular category on consumer wish lists according to the National Retail Federation’s annual holiday survey, cited by 29 percent of respondents, and following only gift cards (60 percent), apparel (53 percent) and books/movies/music (37 percent).
That jibes with the forecast from the Consumer Technology Association (CTA), which is anticipating a 3.4 percent increase in holiday tech sales, to $96.1 billion. Ben Arnold, senior director of innovations and trends at CTA, said early indications point to a good holiday for gadgets thanks to “lots of compelling products” like 4K displays, headphones and connected-home products. The latter, he told TWICE, should have a really big season thanks to greater consumer awareness, and will help drive the higher holiday spend.
No doubt tech is also near top of mind with full-line retailers, who’ve placed it front and center in their Black November/Black Friday plans. Kohl’s, for one, which is better known for its brand-name but off-price fashion apparel and housewares, made a Samsung 58-inch 4K TV a lead item on the cover of its Black Friday circular ($550 plus $165 in store credit), which was leaked last week. It’s sharing page-one ink with a first-generation Amazon Echo for $69 plus $15 store credit; a second-gen Echo Dot for $24; a Nest thermostat for $180 plus $45 store credit; and an Xbox One S Minecraft Creators bundle with 1TB console for $200 plus $60 store credit.
See: Tech Spending To Break Holiday Record
Target too is targeting tech, with a 52-page circular that leans heavily on TVs. The lead item: a 55-inch Ultra HD Element TV that will sell in-store only for its “lowest price ever” at $200, a $180 saving over its regular $380 retail.
Despite month-long promotions by retailers including Lowe’s, which is offering daily deals on smart-home products throughout November, the mighty NATM Buying Corp. is largely keeping its powder dry for the Thanksgiving weekend. “Those five days are still the most important, when we will see the most business,” said Jerry Satoren, executive director of the merchandising organization that includes the country’s largest regional tech, appliance and home furnishings chains.
Related: These 64 Retailers Will Be Closed On Thanksgiving
Satoren expects the eight out of 12 NATM members that sell IT to do a good business in high-traffic items like laptops, convertible notebooks, tablets and gaming PCs, although price declines on “gigantic Ultra HD TVs” of 75 inches or more could keep Black Friday dollar volume below last year’s haul. He’s also concerned by the absence of a “real new [product] hook this year” to drive customers into stores, and believes that migration to 4K TV has already peaked.
That said, Satoren is heartened by the record low unemployment and the fact that “people are feeling better,” as reflected in the group’s higher unit volume of premium TVs. “Only the manufacturers are worrying about tariffs,” he said.
See: NATM Looks Past The Apocalypse
Similarly, Sears Holdings, which is working diligently to emerge from Chapter 11 reorganization, is anticipating the all-time low unemployment rate “to translate into a very good season for us,” said Peter Boutros, president of the company’s Kenmore, Craftsman and DieHard brands and chief brand officer of Sears and Kmart.
“We are certainly gearing up for a very active consumer buying season,” he told TWICE, including a no-holds-barred Black Friday. “It’s a buyers’ market for Black Friday,” he noted. “We’re very aware of it and are preparing accordingly.”
Related: Attention Sears And Kmart Shoppers: ‘We’re Open For Business’
Sears’ bankruptcy aside, Chad Lyon, managing director of electronics, appliance and music for Wells Fargo Commercial Distribution Finance (CDF) — the folks that help retailers pay for what’s in Santa’s sleigh — is anticipating a very merry holiday.
“The health of dealers remains very good,” he said, based on the low delinquency rate, “and most are downright comfortable going into the season. We’re seeing a good, strong consumer and a healthy channel. There’s a lot of optimism out there” — meaning retailers can expect those sleigh bells and cash registers to ring.
