Shopping season Clicks steal the show

The holiday season kicked off strongly with Thanksgiving week end starting 23 November (including Black Friday and Cyber Monday). There were more than 174 mn shoppers over Thanksgiving week end, well ahead of the US National Retail Federation (NRF) anticipations (164 mn). USD 335.47 was spent on average, more than a third of NRF’s estimated average spending for the festive season (USD 967 per person). The festive season, which extends all the way to New Year’s Eve, accounts for >25% of annual US retail sales. 2017’s holiday sales (excluding automobiles, gasoline and restaurants) are expected to meet or exceed last year’s growth (3.6%). Deloitte Consulting also expects total holiday sales including restaurants to go beyond the USD 1 trn mark (seasonally adjusted). Favourable weather conditions, a longer holiday season (an extra day vs. last year) and strong consumer confidence (low unemployment and high wage growth) should bode well for a sturdy holiday sales.

Online shopping remains the most preferred channel. Cyber Monday sales this year hit the highest level on record at USD 6.6 bn (up 16.8% YoY, as per Adobe Analytics). NRF predicts the season’s non-store (online and kiosks) sales to grow 11–15% YoY (USD 136.4–141.3 bn). It has also been noticed that multi-format shoppers tend to spend more than single-format shoppers (exclusively online or in-store). Consumers’ preference for online shopping has enticed retailers to develop their digital offerings. In an effort to maximize benefits from multi-channel sales, retailers also worked on improving customers’ in-store experience. As an example, Walmart tripled its YoY online offering (more than two million items available with free two-day shipping) and set up additional 100 automated order pickup towers to facilitate ‘Click and Collect’. Walmart also re-launched its ‘Holiday Helpers’ programme to assist customers and is throwing more than 20 000 in-store holiday parties. Meanwhile, Ahold Delhaize’s online grocery delivery service, Peapod launched its holiday dinner recipes recommendations four days ahead and offered discounts on large orders. Costco ran its holiday weekend sales online exclusively and expanded its warehouses’ opening hours to meet higher order volume. Amazon hired more than 120 000 temporary workers to tackle the increased load on the company’s logistics at the fulfilment centres and customer service sites. Kroger also hired 14 000 seasonal workers and extended store-opening hours to make the most of the holiday season.

When looking at popular items, consumer electronics were preferred, supported by heavy discounts on smart phones, televisions, gaming console, laptops and toys. Retailers such as Apple and Samsung have also increased production of their major products in anticipation of stronger sales over the festive period. Meanwhile, there is a growing share of consumers preferring experiential gifts over products. Major hotel and resort chains such as Marriott and MGM Resorts have launched promotional offers on early bookings and memberships to capture the most of the holiday travel. Carnival has also introduced attractive deals on cruises to lure customers opting for a sailing experience. Starbucks has come up with customised menu and cup offerings to enhance customer experience.

Overall, the festive shopping season bodes well. Despite the whooping holiday weekend sales, only 9% of the total expected sales by NRF have been achieved yet, leaving a strong scope ahead. On this basis, we have selected several companies we believe are geared up to enjoy a merry holiday celebration..

Shalinee G

Equity Expert

Data & recommendations as of 04 December, 2017 close

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