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39% Expect to Spend More on Apparel for Holiday Gifts: Oracle Retail

Pent-up demand after a long year may be coming to a head as the holiday season kicks off.

More than half (58 percent) of consumers expect to spend the same or more on holiday shopping than they did last year, while 39 percent plan to spend more on apparel and necessities like personal care products for gifts, according to Oracle Retail’s holiday shopper survey published Monday.

The percentage of shoppers spending more on apparel and personal care surpasses those who plan on increasing their outlay on electronics (29 percent), gift cards (27 percent), sporting goods/hobbies (19 percent) and luxury items such as handbags, fashion and jewelry (15 percent).

Interestingly enough, the projections differ from the National Retail Federation‘s outlook, which anticipates average spend per consumer to dip approximately $50 from last year, with nearly $45 of the decrease attributed to consumers’ hesitation to use seasonal sales and promotions to buy other, non-gift purchases for themselves and their families.

Overall, recent holiday surveys have delivered a range of results, largely due to the uncertainty over the course of the Covid-19 pandemic as well as what will happen with a potential stimulus deal.

Shoppers flock elsewhere if they can’t find what they need

Regardless of total projections, if there’s any way a retailer can alienate consumers this holiday season, it’s by not having coveted items in stock. As many as 47 percent of the more than 5,100 consumers surveyed by Oracle Retail said out-of-stock merchandise topped their list for a bad shopping experience, while an even more concerning 63 percent said they weren’t willing to wait for inventory to become available before trying another brand.

“It’s critical to look across your entire operation, so not just looking at the traditional places you sourced your product from before,” said Rose Spicer, global senior director of Oracle Retail Marketing, adding that, “there’s a lot of things that a retailer can do to potentially source the product from somewhere closer to the consumer, like a shuttered store.”

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What’s more, retail is dealing with mounds of “distressed inventory,” all of the product that was locked up in shuttered during the pandemic, she added. “That visibility into where the inventory sits, not just in the warehouse but also being able to track that inventory that’s closer to the consumer to get it to them faster, is definitely is a priority,” she said.

There’s still the question of how and when shoppers are going to get the inventory they want. ShipMatrix’s forecasts expects a capacity shortfall could average as much as seven million packages a day between Thanksgiving and Christmas, meaning retailers are likely to have their hands full.

Transparent communication is a must as deadlines loom

Spicer pointed out that Dec. 18 used to be the day retailers had to get all of their orders out ahead of Christmas Day. Now, however, retailers have the added pressure of deliver the goods even ahead of that deadline with e-commerce spikes straining fulfillment. Seventy-three percent of consumers said real-time updates on item location throughout the delivery process is an important step toward easing their anxiety.

“The most important thing that a retailer can do is communicate that people need to buy earlier,” Spicer told Sourcing Journal. “Make consumers aware that it’s smarter for them to shop earlier just because of the pressures and the delays that the retailers are going to be feeling. I think they can do that in a positive way, but I think it’s important for that education to happen on the front end. That level of transparency has become a must-have.”

And while retailers try to figure out how to get deliveries out faster or use their network more efficiently, they continue to experiment with alternative fulfillment options that have risen in popularity throughout the pandemic. Yet home delivery is still consumer’s top choice, at 66 percent, compared to the 18 percent who will buy online and pick up in-store or the 16 percent will buy online and opt for curbside service. This gives retailers an opportunity to rethink their staffing and overall positioning, Spicer noted.

“Sometimes you just have to get started on not being perfect,” Spicer said. “If you’ve got our fundamentals in place where you’ve got your technology and your processes, probably the processes being most important, then the staff needs to be adaptable and the technology needs to be agile so as the volume increases [and] you can actually respond to that consumer demand. You may need somebody who has typically played a different role inside the store to really be hustling to help fulfill those orders.”

Shoppers say no to returns, for now

Returns are likely to create mayhem in the post-holiday season for retailers and their fulfillment operations and partners alike. A recent Salesforce holiday survey, for example, sees consumers sending back $280 billion worth of global e-commerce orders, or 30 percent of all purchases made during the season. But according to Oracle, consumers now say they are swearing off returns.

While last year’s Oracle holiday survey indicated that 77 percent of consumers planned to make at least one return, this year that number dropped to 37 percent. Spicer noted that the projected falloff in expected returns might be correlated with a recent rise in gift card purchases.

“Historically, especially with apparel and online, people would buy different sizes, try them on and return them,” Spicer said. “People are probably being a bit more thoughtful because there are some unknowns still in the returns process as people flesh it out. You’ve got great retailers like Nordstrom that will take it back no matter what, since they have such a generous return policy. But people are hesitant to deal with the fact if they buy it, it may not be accepted.”

In-store traffic declines expected

Foot traffic will remain challenged during the holidays, in keeping with trends seen throughout the pandemic. Nearly 20 percent of surveyed shoppers plan to do visit stores to do most of their shopping, with 47 percent planning to split purchases between online and brick-and-mortar, the survey said.

This is a massive dynamic shift from the 75 percent who noted plans last year to shop in stores and bring purchases home compared to 55 percent who said they would shop online and ship to their home.

“I think there will still be people that go out for the Black Friday tradition, but it’s going to be more month-long promotions. The reality is, you’re going to see a mixed bag, but I don’t think that stores are dead by any stretch,” Spicer said. “I think that [consumers] need to feel safe in the stores, but I think they’re still a wonderful asset for so many different reasons.”

There has been significant discussion about the future of indoor malls since the start of the pandemic, but 58 percent of shoppers say they were fine with either an indoor mall or an outdoor shopping venue as long as the proper safety precautions are in place. While 79 percent said it was important to see staff and other customers wearing masks, 82 percent believe it is critical to see visible cleaning efforts.