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(originally published by Booz & Company)


“I’m Still Standing,” Say Consumers

This year’s holiday retail outlook suggests that shopping patterns created during the recession are becoming permanent, but there are still reasons for retailers to celebrate.

This holiday season, U.S. polls are reporting more confidence in the economy — but not because consumers have more money to spend than they did last year. Indeed, because the economy is still sputtering, overall retail sales this holiday season are likely to be flat or only slightly up. The confidence may instead be coming from a shift in expectations and habits. Recession-driven consumer shopping patterns that many people assumed were temporary are now becoming permanent. Retailers have adjusted many old practices since 2008, and they have some grounds for optimism — but only if they continue to be capable of rapid change.

These insights are based on a survey of a 1,600-person informal panel made up of frequent retail shoppers, store staff, and retail and consumer executives. We also conducted more than 150 interviews in stores, malls, and airports during August and September 2012. This research shows several distinct trends in consumer mind-set and behavior:

Overall, consumers will remain very cautious this year. A full 52 percent will closely consider affordability in their shopping decisions (the number is even higher for lower-income demographics). Sixty-one percent of consumers say they have “learned to live with less” (up from 53 percent last year). Consumers are optimistic about deals: 73 percent of consumers expect to find great deals this season (up from 62 percent last year).

At the same time, there are signs that consumers are tiring of the ongoing “misery index.” Fifty-three percent intend to buy at least one luxury item (up from 41 percent last year).

Consumers also seem to be looking forward to the holiday season more than they did last year. Fully 61 percent expect to get together with family this year (up from 54 percent last year), and they are looking forward to throwing more parties: 53 percent expect to host multiple gatherings for family, friends, and neighbors (up from 45 percent last year). An appropriate theme for holiday celebrations this year could be “I’m Still Standing”: 51 percent report that economic survival is a great reason for celebrating this year.

The Decreasing Lure of Electronics

In terms of consumer purchases, we expect that apparel will be a hot category and that electronics may fade slightly. The survey found 42 percent of consumers reporting that they intend to buy clothing as gifts (up from 37 percent last year). Anticipating sales and discounts, however, consumers tell us that they plan to buy their apparel later than they did last year — many waiting until well after Black Friday (the major U.S. shopping holiday that falls in late November, just after Thanksgiving).

As for consumer electronics, only 38 percent of consumers have these items at the top of their personal wish lists. Apparently, some demographic groups are approaching high-tech saturation. Not surprisingly, for those who are hoping for electronics, tablets and smartphones top the list.

One electronics category — home entertainment — should remain strong; 62 percent of respondents report that they will be shopping for these items. Hardware (such as sophisticated home theater equipment), accessories, and media are all on people’s lists. And 3-D movies may finally break through into the living room, as a wave of superhero movies hits the stores and meets up with 3-D TVs acquired over the last year.

Downloadable gifts will become a distinct and rapidly growing category this year. E-books, iTunes music downloads, and movies will all be popular. “Virtual goods” have clearly become an acceptable gift for many (for both giving and receiving). More than 45 percent of shoppers expect to give at least one downloadable gift this year — and those items won’t even need wrapping! With more parents buying Kindles and Apple products for ever-younger children (age 10 this year versus age 12 last year), digital media sales look to remain healthy post-holiday as well.

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