The 2018 holiday season is shaping up to be the most robust period of shopping in several years. The current economic expansion is entering its tenth consecutive year of growth. This is the longest expansion in history and is fully expected to continue through the holiday season. Given today’s retail environment, brick and mortar retailers need to take advantage of every sales opportunity they can. This year, the holidays present an incredible opportunity to boost year-end sales, lighten the load of existing inventory, and build new relationships with potential customers.
Brick and mortar retailers should anticipate a great 2018 holiday season and use all of the tools at their disposal to prepare accordingly.
Consumer Retail Spending for the 2018 Holiday Season
According to a recent forecast by the National Retail Federation (NRF), holiday retail sales should increase between 4.3% and 4.8% over 2017 sales levels. This would equal a total of $717.45 billion to $720.89 billion in the months of November and December alone – excluding automobile, gasoline, and restaurant sales.
This growth in holiday sales is primarily driven by a surge in consumer confidence in 2018 that will continue through the end of the year. Increased job creation, improved wages, lower inflation and increases in net worth are all spurring consumers to spend more this year, according to the NRF report.
Infogram Courtesy of National Retail Federation
PwC recently released the results of a comprehensive consumer survey in the U.S., “2018 Holiday Outlook”, and found that, on average, consumers expect to spend 5% more this holiday season. They’ll spend approximately $346 on themselves, $706 on family, and $110 on friends. Around 84% of all consumers are spending as much or more this year than last year, at a total cost of $1,250.
Interestingly, self-described “spenders” and “savers” plan to spend around the same amount this holiday season, $1,255 and $1,248 respectively. It would seem that all around the economy is growing and consumers are spending more than ever, but drilling down into the details, there are a few key demographics and trends buoying this year’s spending increase.
Key Demographics and Trends Driving 2018 Holiday Retail Spending
There are a number of different factors impacting holiday spending levels this year and not all demographics are planning to spend more. According to the PwC report, women plan to spend $42 less than last year. Those who make under $65K will spend $94 less this holiday season, and those from small towns and rural areas will spend $60 less.
While there are some demographics who plan to save rather than spend this year, others are spending far more. Men plan to spend $1,418, compared to $1,090 for women, and those who make over $65K will spend $1,894, up $365 from 2017. The biggest spenders are high-earning millennials, defined as those who make over $70K, who will be spending $2,021. This is more than twice their millennial counterparts who make under $70K, who will spend $839.
The biggest spenders are high-earning millennials, defined as those who make over $70K, who will be spending $2,021.
The amount of millennial spending is one of the biggest trends this holiday season. While millennials have some anxiety over credit card debt, they’ve only known a bull market their entire adult lives and are ready to spend. Nearly a third began their holiday shopping at the end of June. Above all, these shoppers care about quality, convenience, and speed – even above the price of the products. They value products that complement their digital-savvy lifestyle, and they’re also very interested in health and wellness, including fitness products and health food.
The other major trend this year is the dominance of streetwear and its allure to Gen Z shoppers. The market for streetwear is estimated to be worth around $100 billion, and much of this market comprises Gen Z and younger millennials. In fact, nearly three quarters of Gen Z currently wear streetwear style clothing. Around 87% of streetwear shoppers will spend as much or more this holiday season, and 37% have admitted to being inspired to make a purchase by social media. Most streetwear shoppers are likely to live in urban areas and be between the ages of 17 and 36.
But Gen Z shoppers aren’t only interested in streetwear items – they’ll play an important role in retail spending this year. Only about 20% are concerned about debt and nearly 75% will shop on Thanksgiving Day. They’re social media savvy and 55% follow influencers with similar interests. Gen Z shoppers, while currently dwarfed by the spending potential of millennials, are still major contributors to increased spending levels this holiday season.
The demographics and trends mentioned above are some of the primary drivers of retail spending this year. Brick and mortar retailers who prepare for the holiday rush by catering to the unique needs of each demographic can capitalize on a major opportunity to boost sales.
Having access to demographic data is invaluable for brick and mortar retailers. It helps uncover the primary desires of the ideal audience within driving distance of a major mall or shopping center. Mobile device data adds to demographic data, allowing for studies to be conducted on who actually comes to a given retail property. Retailers who leverage demographic and mobile data will have a leg up on the competition.
To see how this would impact your retail strategy, learn more about Directory of Major Malls | ShoppingCenters.com’s DMM Retail Boundaries – a better way to analyze and track retail activity patterns using demographic and mobile device data.