30% of Consumers Will Use Smart Payment This Holiday Season, says PwC’s Consumer Markets Leader Steve Barr
What: We spoke to Steve Barr, Consumer Markets Leader at PwC, about consumers' shopping behaviors during this year's holiday season.
Why it matters: Thanksgiving and Black Friday are the busiest shopping days of the year; however, traffic has declined from previous years. PwC's insights provide valuable information to engage consumers more effectively.
PwC’s 2018 Holiday Outlook report reveals findings from a national survey of 2,071 consumers, offering details about where and when consumers shop, what drives their purchasing decisions, their holiday travel, and movie-going plans and how retailers are preparing for the season. Economic growth in 2018 is poised to be the strongest since 2005.
Consumers told PwC they would spend an average of US $1,250 each on Thanksgiving on gifts, travel, and entertainment, an increase of 5% over last year. Thanksgiving and Black Friday are still the busiest shopping days for stores, but traffic is declining. In 2018, it fell as much as 9 percent from 2017.
More people went online since stores put their best deals on their websites. Online sales for Wednesday through Black Friday was 26% higher than in 2017, estimated Adobe Systems. In 2017, online sales rose 18%, according to Adobe Systems Inc. Sales hit a record of US $7.9 billion. 40% of these purchases were done from mobile phones.
Black Friday is part of the holiday shopping season. According to the National Retail Federation, sales during the last part of the year will be up 4.1% when compared to 2017.
We talked to Steve Barr, Consumer Markets Leader at PwC, about what brands can learn from the new shopping trends and how to target consumers in the best way.
Portada: What can brands learn when looking back to previous years?
Steve Barr: Consumers continue to prefer an omnichannel shopping environment, and innovation is key to staying relevant in this increasingly competitive retail landscape. Additionally, brand trust continues to be an important factor for consumers when making purchase decisions, a trend that we've seen in the past and that continues to prevail. Finally, experiences are critical. Shoppers want to have an enjoyable and stress-free experience, whether in-store or online.
Portada: Why do you think U.S. Hispanics are spending more than non-Hispanics?
S.B.: Hispanic consumers are the second fastest growing ethnic group in the US, and constitute almost one-fifth of the overall population in the US. As true omnichannel shoppers, Hispanic parents prefer to seek ideas and inspiration in stores, while also being ahead of the curve on mobile shopping and smart payment. This holiday season, more than half (57%) of Hispanic parents will be shopping in stores.
Portada: What is your view on what is coming in 2019?
S.B.: Retailers should continue to keep an eye on the impact of trade and tariffs as we move into 2019. A decent consumer sector and strong consumer sentiment in Q4 - consistent with the outlook for holiday spending - will be positive for growth overall, but it’s unlikely to prevent an overall slowing from the Q2 and Q3 pace. If they were looking for a GDP “pop” from holiday sales, I’d say that is unlikely - it’s probably going to be more of a stabilizer. The one upside risk to that is, if it looks like we are going to see existing tariffs move from 10% to 25% on January 1 - or tariffs expanding to all US $500bn of Chinese imports - consumers may be incented to pull demand forward, to near the price increases.
Portada: Can you tell me more about the methodology of the study?
S.B.: Every year, PwC releases a holiday outlook report that compiles responses from consumers about their shopping habits during the holiday season. This year we surveyed 2,071 individuals. The methodology behind the report is to showcase trends impacting consumers around the holidays. This year’s report focuses on different trends and demographics, and found that consumers will spend 5% more this holiday season than in the past.
If retailers are able to reach Millennials and Gen Z consumers, they have a lot to gain. Combined, the number of individuals making up these generations is clearly bigger than any other generational consumer grouping.
Portada: What should brands do in order to leverage the opportunity in Holiday Shopping and stand out among the fierce competition?
S.B.: Millennials and Gen Z will be shopping this holiday season - online, on their phones and in stores. Our Holiday Outlook Report revealed these younger consumers (17-35) plan to spend more or the same as the last holiday season, and consumers across the board will spend 5% more this holiday season. If retailers are able to reach Millennials and Gen Z consumers, they have a lot to gain. Combined, the number of individuals making up these generations is clearly bigger than any other generational consumer grouping. They also yield a lot of retail power.
Portada: What role do you think technology is playing?
S.B.: Technology plays a huge role in how consumers shop during the holiday season. Mobile devices like smartphones and smartwatches will continue to dominate how consumers pay for their holiday purchases. In fact, among Gen Z-ers who plan to do all their holiday shopping online, half will use their smartphones. Overall, 30% of consumers will use smart payment in stores in the holiday season – 24% will pay by smartphone and 16% will pay via a wearable device.
Portada: Do you have any info on what categories will benefit the most from the shopping frenzy?
S.B.: Streetwear – a style of casual clothing that blends diverse global elements is currently valued at upwards of US $100 billion. More than 70% of both Gen Z and Millennials wear streetwear, while 54% of millennial dads and 44% of African-American consumers responded they plan to purchase the stylized form of clothing this holiday. Today, streetwear attracts attention from both private equity and couture, forging a variety of creative alliances with luxury brands.
Images source: PwC