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Shoppers Expected to Spend More This Holiday Season

A very happy holiday season is in store for U.S. retailers.

According to PwC’s 2016 Holiday Outlook, spending is projected to rise 10 percent this year—its highest point since the recession—due to more digital purchases. The National Retail Federation also predicted an increase in holiday sales, albeit a smaller one: 3.6% to $655.8 billion, but still a significant jump since economic recovery started in 2009. Further supporting a successful season is the International Council of Shopping Centers holiday season forecast, which anticipates a 3.3% year-over-year growth in brick-and-mortar retail sales, compared to 2015.

PwC said shoppers are expected to have an average budget of $1,121 for gifts. Sixty percent of retailers plan on providing free shipping, free returns and flexible delivery options this holiday season in an effort to appease consumers, most of whom are expected to buy presents on electronic devices. In fact, digital sales are projected to increase 25 percent this year, which could present an opportunity for retailers to revise their m-commerce and e-commerce platforms. Additionally, mobile commerce will go up 25 percent this year, as more consumers use their smartphones to browse and buy products.

Although brick-and-mortar retailers may find this digital boost threatening, they will likely take the initiative to boost up their in-store consumer experience with diverse merchandise and better customer service.

“Small, independent retailers and local artisans are expected to compete for consumers by offering personal service as well as unique and hand-made gifts,” PwC retail and consumer leader Steven Barr said. “The larger format retailers are expected to provide the services and value that matter most to shoppers, including knowledgeable store associates, speedy check-out options, well stocked stores and great prices.”

NRF’s predictions also support a positive holiday season for retailers, with non-store sales (including m-commerce and e-commerce) expected to increase between 7 percent and 10 percent, possibly resulting in a total of $117 billion for 2016.

“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” NRF’s chief economist, Jack Kleinhenz, said.

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ICSC’s forecast brings up an interesting point about how omnichannel shopping will contribute greatly to retailers’ holiday season success. As physical and digital retail merge together, consumers are spending more across all outlets, including brick-and-mortar locations, online and on their smartphones. Retailers are understanding this shopping shift and providing more purchasing options, including free shipping and in-store pickup.

ICSC said that 96 percent of consumers will spend in stores or online through a retailer with a physical presence. Forty-four percent of consumers will buy online from retailers with a physical presence and ship their purchase home, while 39 percent will utilize in-store pickup options. In terms of presents, gift cards and apparel are topping lists, with 64 percent planning to buy gift cards and more than half (51 percent) planning on purchasing clothing for loved ones and themselves.

“Even shoppers who purchase online favor retailers with a physical presence and an increasing number of consumers are buying online and collecting in stores,” ICSC CEO Tom McGee said. “Consumer intentions show that this digital and physical convergence will be critical for the health of the industry as we close out the year.”