U.S. Holiday season poised for positive results for retailers

The earliest Thanksgiving possible and a strong economy are great contributors equating to strong retail performance for the holidays.

Furthering the good news is Christmas falling on a Tuesday which gives the added Saturday and Sunday for holiday shopping and many taking Christmas Eve off to make for a four day shopping weekend. The maximum 32 days between Thanksgiving and Christmas for shopping along with a positive consumer mindset will give retailers something to celebrate. 

Three of the most relevant factors impacting the expected 4.8% increase for the holiday season are mcommerce (Mobile commerce), retailer synergies delivered to the consumer and mindful portfolio strengthening.

[Inlinead]

Mobile commerce

Estimates across the industry for mobile commerce as compared to last holiday range from increases of 32.6-39.6 percent. My estimation is that mcom will increase beyond 40% for 2018. Consumer adaption of spending online is higher, experiences are seamless, mobile payments are easier, and integrated experiences like click and collect, all promote mcom. Shoppers are more readily using mobile devices to make purchases from the comfort of their own homes or on the road. Mcom meets the consumer at their location driving the convenience and value factor.

Mcommerce is one of the driving factors behind ecommerce growing 16.6% in 2018 with ecom slated to become 12.3% of total retail sales for holiday time period. For the U.S. market, mcom will contribute 53.9 percent to total ecom sales.

Retailer synergies across shopping platforms

Over the past few years, retailers have been spending time, money and resources on building out the infrastructure and capabilities to best support a preemptive distribution model. Investments in technology, supply chain, inventory management and processes that support seamless integration across all channels are making a relevant impact on the shopping experience delivering ease of purchasing, quick payment options and reduced delivery times from previous years.

See also: 30 under 30 finalist: Cat Lecardonnel of John Lewis

According to an NRF survey on Thanksgiving, more than 89 million people shopped both online and in stores, up nearly 40 percent from last year. The multichannel shopper outspent the single-channel shopper by up to $93 on average. Increased shopper spend for multichannel retailers has proven to be three times the single channel shopper while omnichannel shoppers spend five times more than single channel shoppers. The drive for retailers to reach a synergistic approach to omniretailing is based on driving sales, building loyalty and creating more sustainable competitive advantages.

Source: NRF's Annual Thanksgiving Holiday Trends Consumer Survey, conducted by Prosper Insights & Analytics. 

Consumer confidence in mobile payments, and digital wallet are making the transactional process easier for both online and in physical stores. Removing the pain point of the transactional process for customers will continue to improve significantly as we move into 2019.

Delivery time is a key consideration for the mind of the shopper, especially during the holiday season. According to Rakuten Intelligence, average delivery days for Amazon has reduced by one day as compared to 2016, whereas other retailers have been able to improve delivery time by two days. However, Amazon remains the leader of the pack in terms of package delivery with an average click-to-door speed of three days while other ecom businesses are still at 4.5 days.

Portfolio strengthening focused on the customer

Over the past three years, brick-and-mortar retailers have been focused on

portfolio strengthening and in 2018 this is paying off from a customer spend perspective.  Retailers have looked at the existing portfolio of stores making tough decisions about closing underproductive locations, and reevaluating the target markets to position stores that better align with the markets. At the same time, retailers have been investing in the productive stores with enabling technologies, improved experiences and more curated assortments all to drive a deeper connection with the customer. 

The holiday period is important for most retailers, especially in electronics, jewelry and general merchandise categories. While sales can account for over 30 percent of the annual sales for some retailers and reaching as high as 38 percent for some, the real metric impacting theholiday is profit margin. Meanwhile gross margins will fluctuate across retail merchandise categories, the metric is heavily influenced by markdowns and supply chain. However, operating profit across many categories doubles or even triples for Q4. Fourth quarter profit can account for over 50 percent of annual profit on 35 percent of the salesFor many retailers, the operating profit in Q4 is significantly higher when compared to Q1 through Q3.

See also: Customer experience trends to watch in 2019

Holiday cheers for most retailers

Retailers over the past year have been focused on improving both the customer experience and back of house operations to better deliver a higher level of engagement for their target markets. Through ease of systems, integrated platforms and streamlined supply chains including last mile delivery, retailers are positioned to meet the demands of the high expectations of today’s technological advanced and informed holiday shopper. Let’s not forget Black Friday is the day retailers move into the black and this will surely be the case in holiday in 2018.