December is without doubt the most profitable trading period for retailers in the year. In the days of old, families would flock to their favourite department stores in search of the hottest new products, but times they are a changing. Nowadays, the old school contingent of traditional shoppers is a dying breed. An increasing number of consumers are turning towards online shopping – PC, Mac, smartphone, tablets – for their Christmas shopping, and traditional retailers are noticing.
There are many reasons why shoppers have moved away from conventional methods of Christmas shopping, notably traffic considerations, convenience, fatigue, waiting in lines, and logistics. Online shopping provides customers with an all-in-one experience where everything from the World Wide Web is available on your screen. Intelligent software is capable of ascertaining your shopping preferences based on your search history. As such, targeted ads can be directed to you and the ads are likely products and services you are interested in.
The online shopping universe is perhaps the most intelligent human innovation ever envisioned, and it is coming to fruition right before our eyes. Google Glass, iOS and Android technology and the sophisticated algorithms that govern their operations make it possible for personalised shopping experiences like never before. Such is the appeal of online retail shopping that store-based retail sales on Black Friday dropped to $10.4 billion in 2015 from $11.6 billion in 2014. And when it comes to Thanksgiving sales, 2014 figures were $2 billion and 2015 figures were $1.8 billion. The declines are not due to decreased consumption – they are due to online sales increases.
Clothing, Restaurant & Sports Booming in Christmas Shopping Season
The appeal of online shopping is especially strong going into the Christmas season. Adobe conducted a poll towards the end of November 2015 whereby it was determined from the 4,500 retailers polled, a 14.3% rise in online sales had taken place over Black Friday. The Christmas shopping season trumps Black Friday hands down, and an even greater increase in online retail sales is likely to take place. The Commerce Department reported that retail sales growth increased by 0.2% in November 2015, up from a 0.1% increase in October 2015. As expected, the beneficiaries of the holiday shopping season included sports-related stores and fashionable outlets. But one of the biggest gainers heading into December is the restaurant industry.
How Will a Rate Hike Impact Retailers?
With the frenzy of shopping activity gaining momentum each and every day, there is a smidgen of concern among retailers and savvy shoppers about the impact of a Fed rate hike on December 16, 2015. There is overwhelming consensus that the interest rate will be raised by as much as 25 basis points, and that within a year the US will have an interest rate of 1%. Naturally, increased interest rates result in higher costs of credit which means less personal disposable income for shoppers. However for December 2015 we are unlikely to see any appreciable decrease in shopping-related activity – online or at traditional outlets. The lag effect is the reason why. The latest reports from the Commerce Department revealed that a 0.6% increase in retail sales had taken place in November, from 0.2% in October (excluding food services, building materials, automobiles and gasoline).
Interesting Shopping Trends in the United Kingdom
Believe it or not, retail activity in the United Kingdom is dominated by online shopping. Approximately 10% of shoppers in the UK prefer in-store shopping – the other 90% prefer online shopping. This information was gleaned from a company known as Approved Index. Other information in this report includes the following:
- 71% of shoppers prefer online shopping only
- 61% of shoppers prefer partial shopping online
- 36% of shoppers prefer mostly shopping online
- 32% of shoppers prefer in-store shopping only
The last bullet point is especially notable in that it highlights the significance of online shopping in the United Kingdom. There are many reasons why online shopping is preferred by UK consumers, including:
- 24% of shoppers are annoyed by Christmas songs
- 78% of shoppers are put off by overzealous customer sales staff
- 39% of shoppers do not enjoy carting plenty of shopping rags around
- 60% of shoppers simply prefer shopping online as opposed to High Street shopping
While the numbers in the US may not quite measure up to those of the UK, the trend in developed countries is clearly moving in favour of online shopping over Christmas, and other holiday periods.
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