Faith Hope Consolo, Douglas EllimanI am happy to report that early indications point to results of a strong holiday shopping season! Once all reports are in, it is anticipated that holiday spending to exceed $1 trillion.
Wow! That represents a 3.6% to 4% increase over 2015. (Deloitte, “2016 Holiday Survey.”) Another encouraging snippet is that early forecasts indicate a “record-shattering season for the nation’s top shippers.” UPS and FedEx forecast 15% increase from last year.
Now that all the holiday gifts are opened, the returns start coming in to brick and mortar retail locations to return the unwanted holiday gifts received online. This gives them an opportunity that e-retailers miss: the chance for another sale! Most e-retail shopping happens during the holiday season and post-Christmas rush of returns are a lot of items purchased online. The majority of those returns are coming back to brick and mortar retailers rather than their e-commerce counterparts. Consumers return in-store at an extremely high rate – at J.C. Penney, the WSJ reported, more than 90% of online returns are done in physical retail locations. This gives a very merry opportunity for a retailer to upsell, get rid of inventory and make sales using gift cards. In anticipation of the foot traffic from returns, many stores are stocking their shelves with new merchandise. Stores have increased their staff on their sales floors as the new year approached and offered discounts, coupons and other incentives to keep shoppers in the store.
Amazon.com, the biggest online retailer, said it had shipped more than one billion items through Amazon Prime and Fulfillment by Amazon this holiday season. The online retailer also said it had its best holiday season ever for Amazon devices, with the Echo Dot, Fire TV Stick, Fire tablet and Amazon Echo topping its best-sellers list.
Gift cards are, as always, the golden ticket for retailers and that will have great impact on the 2016 results. People prefer to receive gift cards for the holidays as per many holiday consumer surveys conducted in the past few months.
According to NRF’s latest survey, the biggest shopping day of the holiday season was December 17th with 156 million shoppers expected for Super Saturday exceeding the 154 million expected for Thanksgiving weekend. 12% said they wouldn’t buy their last gift until December 23rd, and nearly half of consumers plan to shop the week after Christmas. Reports have been emerging with categories of gifts purchased this season; 50% clothing/accessories, 36% toys, 34% gift cards, 33% books, CDs, DVDs, videos or video games, and 23% electronics or computer-related accessories. The timing of Christmas this year gave consumers a couple of extra shipping days in the busiest shipping week of the year.
It’s an important time for businesses as the Christmas shopping season can make or break the year. The traditional “day after Christmas” sales faced multitudes of returners and bargain shoppers. Some buy before Christmas, there are those who buy after Christmas, and then there`s the customer who does both...like me!
After this tremendous holiday season, retailers are going to push hard to keep the momentum going in 2017. Strong online sales are feeding into e-retailers finding physical space, while brand stores are evaluating flagships as part of global advertising campaigns, rather than any particular impact on cost of goods sold. This country is based on consumer spending – when it’s up, dreamers will dream, and that is good news for retail real estate, and property values, in general. Happy new year and happy shopping!
Faith Hope Consolo is the chairman of Douglas Elliman’s retail leasing, marketing and sales division, New York, N.Y.
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