Are Consumers Trimming More Than Retailers Expect This Holiday Season?

According to the National Retail Federation, consumers are reporting that they will be more cautious this holiday season and plan to decrease what they spend on their holiday gifts. While consumers are reporting they will only plan on cutting their spending back just two percent over last year on average, NRF is forecasting that holiday sales should increase almost four percent.

Still, this year’s holiday season is one that will make every predictor scratch his or her head. This year’s shopping season is the shortest ever, with just twenty-six days. Thanksgiving day is also the first day of Hanukkah; this is the first time this has occurred since 1888. So no one knows quite how shoppers will react to this, as there is no way to compare shopping behavior from then until now.

This is all adding up to one of the least predictable and most odd holiday shopping seasons ever. What better reason is there than to get as much information on what holiday shoppers are planning and what they are looking for?

According to their survey there are five major points retailers need to consider this holiday season. While the first is the biggest cause for consumers cutting back, the remaining four will let you know what shoppers are planning to do this holiday season. Understanding how shoppers plan to spend their money and where, will help you plan your holiday sales and how to reap a piece of the expected $600 billion that will be spent this year.

Washington’s Effect
One of the first issues that still has many consumers on edge is how the lawmakers are dealing with the current state of our economy. Gridlock in D.C. seems to be a major concern as almost eighty percent of those polled plan to tighten their spending belts this holiday season. Until our congressional leaders take on the various concerns many shoppers have such as the debt ceiling and our nation’s economic well-being, expect this to remain a key issue with holiday shoppers.

Spreading It Around
While in years past many shoppers have preferred to go on a whirlwind shopping spree to buy as many gifts as they can in a weekend or two, more shoppers are planning on changing those plans this year. Shoppers are reporting that for this holiday season, instead of buying it all at once, they plan to spread their buying out over multiple paychecks. Some have reported that they started their shopping in September and most report that they started by Halloween.

By buying a bit at a time, the overall impact of their spending will not be as altering to their family’s budget. For retailers this means a less intense push during the holiday season and possibly makes it more difficult to weed out their holiday sales results since it is spread out over many weeks and months. This may also play havoc with your sales force and planning their work schedules. The majority of shoppers should still hit your stores over the weekends, so plan accordingly.

Discounts Drive Sales
As more retailers are offering time-sensitive discounts and special offers each year during the holidays, more consumers are waiting on them before they buy. When polled about why shoppers decided to shop and buy where they did or will, over thirty-five percent report that the most important factor was the sale or discount offers the retailer was or will offer. The next most important factors were selection (sixteen percent), quality of merchandise (just thirteen percent) and free shipping offers (just over three percent).

As a retailer, this should remind you how important your social media and advertising is during the holiday season. You need to get your message out to as many shoppers as possible, especially if you’re planning on a big holiday sale this year. You can compress the number of days your sales run, just ensure the dates and your shoppers know times. This will also help in planning your sales staff’s schedule.

Online Shopping
As always, online shopping will be an alternative for many shoppers. Almost forty percent report that they will do some of their shopping online again this year. This number will continue to grow each year as more retailers offer shipping discounts and make it easier for shoppers to compare prices from the comfort of their homes or offices.

As a retailer, the importance of having an online store is growing as well. If you still haven’t added an online retail site to your store’s portfolio, 2014 may be the year you do it and capitalize on the money being spent online each year.

Gift Cards
For the seventh year in a row, gift cards top many holiday gift lists, again this year almost sixty percent claim that a gift card is what they want. Clothing and clothing accessories are the second most requested items with electronics coming in third.

For retailers this is a great win-win situation. Gift cards are easy to sell and give you instant profit when they are purchased. Gift cards are also rarely used for the exact amount they are purchased for. With that in mind, have you started selling gift cards in your store yet?

Holiday shoppers are a fickle group and with our economy in the state of flux that it is currently, you need to do everything you can as early in the holiday shopping season as possible to reap the dollars shoppers will be spending. While some shoppers do not consider fishing tackle a hot item for gift giving, many do. The ones that do are not only your long-time customers, but also potential customers that you need to build a relationship with the first time they come in your store.

What are you doing this year to capture your part of the $600 billion that will be spent this holiday season? Share your thoughts with us on our Facebook page and in our LinkedIn group.