With unemployment rates at a seven-year low, all signs point to a very merry holiday shopping season for U.S. retailers, according to The NPD Group’s “2015 Holiday Purchases Intentions Survey.”
Last month, the research firm polled 3,620 people aged 18 and older and found that while the majority of consumers plan to spend the same amount on gifts in 2015, 15 percent intend to spend more—a 3 percent boost over last year’s big spenders.
Furthermore, the number of consumers who plan to spend less fell from 20 percent to 16 percent, showing the gap between those who plan on spending less and those who plan on spending more has narrowed. In fact, it’s the closest the two groups have come since 2012.
“Consumers are ready to spend for the holidays, more so than in recent years,” Marshal Cohen, chief industry analyst at The NPD Group said in a statement. “However, manufacturers and retailers need to pay close attention to what is driving the consumer mindset and deliver product that anticipates inevitable shifts in their thinking over the course of the season.”
The survey found that two-thirds of consumers plan to do their research before spending, turning to the Internet and consumer reviews before mobile apps and infomercials.
Cohen noted, “Consumers are more complex and marketers have more opportunities to reach them than ever before. Truly connecting with consumers requires interaction and omnipresence, emphasizing a complete experience that extends beyond channels, beyond traditional methods and beyond the holiday season.”
Paying attention to the resources shoppers look to could help retailers capitalize on the mean spend for the holiday season: $619, a 5 percent increase over what consumers planned to spend last year.
“Positive consumer perceptions combined with holiday promotions, could drive early impulse purchases, but the market has to deliver enticing product that consumers want and need in order to build on that momentum and keep them spending,” Cohen added.
Does it matter?
While forecasts are great at offering a glimpse into the consumer mindset, a PricewaterhouseCoopers report published Tuesday said that those predictions are becoming less relevant for retailers.
Instead, “PwC’s 2015 Holiday Outlook” contends that concentrating on building long-term shopper relationships is how retailers will define success this year.
According to the report, which surveyed more than 2,000 consumers as well as 230 retailers and manufacturers between July and August, shoppers plan to spend $1,018 during the holiday season. But while the majority of shoppers will likely spend the same or slightly more this year, those with household incomes of less than $50,000 per year will be spending less.
Moreover, Millennials—the demographic representing 75 million people aged 18 to 34—are primed to spend a total of $63 billion this holiday season, but of that, 52 percent intend to spend a larger share of their holiday dollars on experience-related purchases such as travel and entertainment.
Black Friday, meanwhile, is less relevant: 29 percent of those surveyed will likely complete more holiday shopping before then than on the day (26 percent).
In addition, Millennials ranked online shopping lower (after department, mass and specialty stores) than older consumers, indicating their desire to see, touch and try the merchandise. Indeed, nearly 60 of all shoppers will likely spend in-store this holiday season.
But when they do shop online, consumers expect free shipping as standard (83 percent) and the ability to return online purchases in-store will influence the buying habits of 67 percent.
“The leading retailers are employing aggressive strategies in both the physical and digital channels to establish meaningful relationships,” said Steven Barr, PwC’s U.S. retail and consumer leader, “Which is why we believe the biggest winners of all this holiday season will likely be the consumer as it is, without a doubt, a buyer’s market.”
Cohen concluded, “Just as the consumer mindset is one component to holiday success, the holiday season is one leg of the larger retail marathon—it’s not the finish line.”