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PwC: Digital And Mobile Holiday Spending Will Jump 25%

If retailers are seeking a reason to be optimistic headed into the holiday season, they may have just found one: customer spending this year is expected to increase 10% overall compared with the 2015 holiday season, according to PwC’s 2016 Holiday Outlook.

Consumers will spend an average of $1,121 each, according to the report. But perhaps more indicative of the overall economy’s improvement, shoppers earning less than $50,000 per year will spend at a significantly higher rate than they did during the previous holiday season: $837, a 23% increase over the $680 spent in 2015.

0aholidayhubThe $50,000+ earnings crowd also is on track to spend more this holiday season, but the percentage increase for this group is much smaller. Each high earner is set to spend $1,388, compared to $1,331 in 2015, a 4% increase.

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“Clearly, we’re starting to see full employment,” said Steve Barr, Leader of the U.S. Retail and Consumer practice at PwC in an interview with Retail TouchPoints. “Along with full employment, we’re also starting to see wage growth. We’re also seeing the continued effect of low commodity costs, especially gasoline, so there are clear economic drivers that are impacting the consumer sentiment. We really have a generation here — the under-35 and the below-$50,000 demographic — that have really been held back since the Great Recession. Although it can’t be proven economically, it’s clear to us that psychologically, the consumer is ready to break out and spend.”

Balancing The Store And Digital Channels

While retailers should feel encouraged by the expected spending uptick, they also must pay attention to how consumers plan to spend if they want to maximize sales. Shoppers surveyed revealed that almost half their total holiday budgets (42%) will go to travel and entertainment rather than gifts, highlighting that brands must continue to find ways to entice consumers into the store in the first place. However, the future of experiential retail might not include in-store events after all. While 33% of retailers think these events matter, only 21% of consumers actually do.

Furthering the need for retailers to bolster their store experiences, both e-Commerce and mobile sales are set to skyrocket, increasing by 25% each. With more shoppers expected to buy through digital channels in the 2016 holiday season, retailers need to ensure that this growth doesn’t cannibalize their brick-and-mortar presence. However, brands are encouraged to continue optimizing e-Commerce and mobile experiences to include frictionless, one-click checkout and easy access to store inventory.

“Retailers have done a phenomenal job at creating a much more efficient process for the consumer,” Barr said. “The phone is now a tool for research, and it’s quickly becoming a tool to complete the transaction as the retailers improve their mobile sites, remove the number of clicks and make the purchase highly efficient.”

Contending With The Amazon Effect

Keeping that healthy balance between the online and in-store experiences will be important, especially as the Amazon effect continues to kick into high gear. As many as 90% of consumers are Amazon shoppers, with 37% of them even saying that they shop less often at retail stores because of the site.

“It’s really a battle of relevance for store-based retailers,” Barr noted. “We’re seeing a very significant investment in leveraging the very important strategic assets that they have, that the online retailers don’t: exceptional store associates, well-stocked stores and speedy checkout with the ability to have it now and take it home.”

Barr also indicated that retailers will be ramping up their click-and-collect capabilities for the holiday, both within the store and at curbside.

“In prior periods, we saw very long waits and inexperienced staff that really made completing a click-and-collect transaction frustrating and not much of a convenience or time saver,” said Barr. “They’re going to make sure staffing levels are appropriate to achieve their objectives, and the physical stores have much better space allocated to the click-and-collect activities.”

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