Since the summer, analysts have been predicting record low holiday spending. In response, retailers have been promoting special sales since before Halloween. JC Penny, Target, and Overstock are among several retailers to offer daily deals to entice shoppers each day. Sears and Toys "R" Us released their Black Friday ads in October in order to whet consumers’ appetites early. A quick look at search traffic reveals extremely fierce competition for "Black Friday" keywords. Target, Wal-Mart, and Amazon, the top 3 retailers capturing "Black Friday" keyword searches, are heavily invested in paid search marketing. Almost 70% of Target’s "Black Friday" search traffic is paid; that is up from 36% last year. Wal-Mart’s paid share this year is 31%, versus 21% last year.
Everyone is waiting with baited breath to see how consumers respond on Black Friday, the "official" start of the holiday shopping season. Here are some findings from a recent Compete study that will shed some light onto expected consumer shopping behavior.
- 86% of shoppers have completed less than half of their total holiday shopping. 41% have not yet begun, meaning retailers still have plenty of time to entice consumers with special offers.
- 35% of respondents plan to go shopping on Black Friday this year. If you are among this group, be prepared for long lines at the register.
- 90% of consumers will spend at least some portion of their holiday budget online this year, up from 84% last year. E-retailing continues to become a preferred shopping method for consumers, especially during the busy holiday season.
- Consumers are likely to take advantage of cross channel shopping options. 42% reported that they are likely or extremely likely to select an "in store pick up" option, if available, on their holiday purchases.
- 44% of consumers plan to spend less this holiday season compared to last year; 45% plan to spend about the same and only 12% of shoppers plan to spend more. Consumers are indeed feeling the pinch, but in a market where flat is the new up, it is encouraging to see that more than half of all consumers do not plan on decreasing their budgets.
Seeing as tight budgets will make for fierce competition, what can retailers do to target those most willing to spend? Focus on online shoppers. I compared shoppers who plan to spend more than 30% of their holiday budgets online (active online shoppers) to shoppers who plan to spend less than 30% of their budgets online. Two important differences emerged:
- A greater percentage of active online shoppers plan to go shopping on Black Friday; 37% anticipate shopping that day versus 33% of other shoppers. If you are a retailer hoping to make it out of the red this Friday, your best bet is to appeal to online shoppers looking for a great deal.
- Active online shoppers plan to spend more this holiday season, both online and offline. They anticipate spending an average of $912 on holiday purchases, where as other shoppers are planning on spending only $438 in total.
Turns out, Target and Wal-Mart had the right idea to target online Black Friday consumers. It will be interesting to see if retailers who invest heavily in online advertisements will in fact fare better than retailers who ignored this channel. There is obviously a lot at stake for both retailers and consumers this holiday season, so the time to act is now. After all, there are only 31 more shopping days until Christmas.
Debra Miller Arbesman is senior associate, retailer and consumer products at Compete, a Kantar Media company that helps brands improve their marketing based on the online behavior of millions of consumers.