It’s that time of year again, when door busting sales and videos of Americans racing each other through store walkways to sniff out deals make national news. And from the look of things, 2017 is going to be a good year for retailers.
From tech gifts to stocking stuffers, the average American shopper is projected to spend between $970 and $1,200 on holiday shopping this season, an increase over 2016 spending, according to holiday predictions reports by the National Retail Federation and Deloitte Insights.
Holiday retail sales nationwide are expected to exceed $678 billion, also up from last year’s $655.8 billion, according to the NRF’s annual survey by Prosper Insights & Analytics.
Each year’s projections have a major impact on the overall economy. For retailers, it affects every aspect of their business, from product development to supply chains, marketing initiatives and staffing.
“Retailers have been stocking up in expectation of this, and all signs are that this will be a busy holiday shopping season,” NRF President and CEO Matthew Shay said in a 2017 NRF press release.
The most anticipated gifts of the season include Apple’s new iPhone X, Sony’s PlayStation VR, Nintendo’s retro Super NES Classic and Amazon’s second-gen Echo – just a snapshot of what’s featured on holiday shopping guides such as TIME, CNN and Fortune.
Consumer Insights: Predicting an Online Shopping Boom
Online shopping, in particular, is expected to break records, according to industry surveys and reports. For the first time in the history of NRF’s annual survey and Deloitte’s 2017 Holiday Survey, online shopping is projected to exceed in-store spending.
How to Predict Tomorrow’s Shopping Habits
Data collection and analysis play a pivotal role in predicting holiday spending. By gathering information about when, where and how much consumers are spending and planning to spend, combined with online shopping behavior such as time on page, product views and cart abandonment rate, data analysts can better predict future shopping habits.
The Adobe Digital Insights team gleaned information from an internal database consisting of online transactions at the largest 100 e-commerce companies in the U.S. as well as companion research including consumer feedback and analysis from 12 million social mentions.
The result, a forecast that online sales will account for $107.4 billion this holiday season, a 14% increase year over year.
Adobe’s Holiday Predictions Report also revealed key online shopping days will exceed last year’s sales, including a 15% jump on Thanksgiving Day and 16.5% increase on Cyber Monday.
Retail giants like Walmart, Walgreens and Amazon are tracking customer shopping habits year-round, in real-time, collecting huge amounts of data.
The largest retailer in the world streams internal and external data from more than 20,000 stores in 28 countries to its recently constructed Data Café, an analytics hub in Bentonville, Arkansas, according to an article from Forbes.
The initiative allows data scientists to solve problems faster by seeing what consumers are buying and what they aren’t – in real-time. The system is pulling in transaction data as well as economic data, social media data, gas prices, and Nielsen data.
In an interview with Forbes, Senior Statistical Analyst Naveen Peddamail said, “Our goal is always to get information to our business partners as fast as we can, so they can take action and cut down the turnaround time. It is proactive and reactive analytics.”
Amazon is collecting data from 40 to 50 million Amazon Prime members, according to an article published by Fast Company. In doing so, the company is making it easier for consumers to buy what they want by using purchase history and browsing data to create a customized home page.
Creating a personalized, seamless experience helps Amazon launch new products that will gather even more data.
Buying products from Amazon has expanded from just a single tap on a smartphone to interacting with the Amazon Echo, the voice-recognition box that lets you order simply by saying what you want. Now, the company is launching the Echo Look, a hands-free depth-sensing camera, that will serve as a digital stylist able to make suggestions on the latest fashion trends.
The Echo Look can snap a photo or record a video of you so that you can give yourself a complete style check before leaving the house. The device will also send the image to the cloud where it can be stored as part of your personal fashion history, and if you like, offer recommendations based on current trends and what looks good on you. The goal is to make it easier for consumers to buy clothing, accessories, shoes and more based off the suggestions made by Echo Look.
The Economic Impact of Consumer Spending
Consumer spending accounts for about 70% of gross domestic product, according to an article from CBS News. A huge chunk of that spending occurs between November 1 and December 31, a period which accounts for one fifth of all retail sales throughout the year, according to the NRF.
Nearly 70% of Americans – about 164 million people – are planning to do at least some of their holiday shopping over Thanksgiving weekend alone, according to the 2017 NRF survey.
With a record-breaking forecast, strong consumer confidence is a positive sign for the overall economy. According to Deloitte’s 2017 Holiday Retail Survey, 80% of people report their household income is the same or better than last year, up from 63% who said the same five years ago. Typically, this sense of financial confidence heavily influences buying habits during the holiday season.