Euromonitor International Holiday Shopping Trends© Euromonitor International PASSPORT 2INDUSTRY: SECTOR© This piece of content includes proprietary information from Euromonitor International and cannot be used or stored with the intent of republishing, reprinting, repurposing or redistributing in any form without explicit consent from Euromonitor International. For usage requests and permission, please contact us euromonitor/locations.2nternat© Euromonitor InternationalEuromonitor International is a global market research company providing strategic intelligence on industries, companies, economies and consumers around the world. Comprehensive international coverage and insights across consumer goods, business-to-business and service industries make our research an essential resource for businesses of all sizes.Our global market research database, Passport, provides strategic intelligence on consumer goods. It offers shared access to all of our internationally comparable statistics, analysis and datagraphics. Passport connects market research to your company goals and annual planning, analysing market content, competitor insight and future trends impacting businesses globally.About Euromonitor International and PassportINTRODUCTIONWhy Does Holiday Shopping Matter?US Holiday Shopping Overview2018 Holiday Shopping TrendsBlack Friday and Cyber Monday Go Global© Euromonitor International PASSPORT 5INDUSTRY: SECTOR Certain general merchandise categories are very cyclical, with a large share of sales taking place around holidays. This is particularly the case towards the end of the calendar year, when gift-giving holidays and special events dominate consumer spending. A strong performance by a retailer at this time of year can help make up for an otherwise mediocre year, and give healthy retailers powerful momentum for the next year. The end of year shopping season in the US has gradually expanded over the last decade, now encompassing almost two full months. This allows more time for retailer experimentation and innovation.Retail sales are cyclical and holidays deliver a disproportionate share of sales Shopper behaviour is very different during the holiday shopping season compared with the rest of the year. Time-pressed consumers are especially open to trying new, time-saving services and to visiting retailers they dont normally shop at to get gifts for others. This makes the holiday season a prime time for retailers to promote new services and channels, and to reach new consumer groups. Best-in-class retailers use the holiday shopping season not just to reach consumers in their core market, but also to promote their products to international consumers.Holidays offer an opportunity for retailers to advance strategic initiatives and differentiate To successfully execute holiday strategies, retailers must begin preparing months ahead of time. Preparation is key, since driving traffic and sales requires engagement from all aspects of a retailer. From marketing and merchandising to less obvious divisions, such as HR (hiring seasonal employees), supply chain (ensuring orders arrive on time during peak volumes) and IT (shoppers cannot buy if the website is down), preparing for the holiday shopping season is complex and requires cross-organisation collaboration.Important retail holidays require advanced planning across all divisions of a retailerWhy does holiday shopping matter?HOLIDAY SHOPPING TRENDS© Euromonitor International PASSPORT 6INDUSTRY: SECTORUS holiday shopping overviewHOLIDAY SHOPPING TRENDSSource: National Retail Federation*National Retail Federation forecast The US retail industry has a wide range of holidays around which to strategise throughout the year, but no shopping season is as important as the end of year holiday season. November and December are some of the biggest shopping months of the year in North America. Officially kicking off with Thanksgiving, Black Friday and Cyber Monday and continuing through to the end of December, the end of year holiday season is thus critical for both brick-and-mortar and e-commerce players. The holiday season is especially important for channels that specialise in electronics, toys, jewelleryand apparel items commonly purchased as gifts. According to the US Census Bureau, some of the retail channels that are most dependent on the holiday shopping season are: Hobby, toy and game stores (30% of sales taking place during November and December in 2017) Jewellery stores (28%) Department stores (25%) Electronics and appliance stores (23%) Clothing stores (22%)USD540USD560USD580USD600USD620USD640USD660USD680USD700USD720USD7402014 2015 2016 2017 2018*November and December Retail Sales, Billions, 2014-2018Holiday Retail Sales, Billions© Euromonitor International PASSPORT 7INDUSTRY: SECTOR Because the end of year shopping season is such an important quarter for retailers sales, a good sales performance during this time of year puts a retailer in a strong position going into the next year. Conversely, a weak performance during the end of year shopping season puts a retailer in a fragile position, particularly for retailers that had an otherwise mediocre year. The first quarter of the year is a popular time for retailers to announce store closures, with decisions often made based on end of year sales. Thus, the 2018 end of year shopping season takes on even greater importance for retailers which have seen difficulties already this year. Struggling retailers including JCPenney, Neiman Marcus, J Crew, Bebe, and other companies that have seen disappointment and declining sales so far in 2018, are especially vulnerable in the event of a weak holiday season.Make or break for retailers on the brinkHOLIDAY SHOPPING TRENDSImage credit: Masaaki Komori via Unsplash© Euromonitor International PASSPORT 8INDUSTRY: SECTOR0% 5% 10% 15% 20%ThanksgivingBlack FridaySaturdaySundayCyber Monday2016-2017 Online Sales Growth by Holiday, USD BillionsUSD0USD2USD4USD6USD8Cyber Five Online Sales, USD Billions2018 holiday shopping trends: E-commerce continues to growHOLIDAY SHOPPING TRENDS E-commerce continues to have a growing role in overall retail during the holiday season. According to Adobe Digital Insights, 58 of the 61 days between 1 November and 31 December in 2017 saw online sales of USD1 billion or more, up from 53 days in 2016. Cyber Monday remains especially important for holiday e-commerce, both in terms of volume sales and in terms of year-on-year sales growth for e-commerce. E-commerce is important during the holiday season partly due to consumers sustained interest in shopping online for convenience reasons, which is particularly attractive at a time of year when consumers face lots of demands on their time. Furthermore, e-commerce gives retailers tools for helping last-minute shoppers. Even after the cut-off date for shipping, retailers can use e-commerce to provide information about store promotions and hours, promote in-store pick-up and sell gift cards electronically. Powerful e-commerce players such as Amazon, as well as retailers with sophisticated omnichannel capabilities, are winners from the role e-commerce plays during this time of year. Source: Adobe Digital Insights© Euromonitor International PASSPORT 9INDUSTRY: SECTOR Thanksgiving, Black Friday, and Cyber Monday kick off the holiday shopping season: few shoppers complete their holiday shopping by end of November. Even as the holiday season starts earlier each year, there are plenty of sales to be made in the days leading up to December 25 (the Christmas holiday on which many Americans exchange gifts). Retailers have been building sophisticated omnichannel and logistics initiatives to help consumers make purchases when and how they want year-round, but such strategies take on a renewed importance during the end of year shopping season. Most retailers have a cut-off date for standard shipping of products to arrive before December several days prior. Retailers that build infrastructure to support last minute shoppers, however, will see incremental sales gains through the very end of the shopping season. Some retailers have been expanding express shipping options to attract last-minute shoppers: for example, in 2017, Amazon offered same-day delivery in selected cities through to December 24. Most retailers do not offer same-day shipping at any time of year, however, and instead are increasingly promoting buy online, pick-up in-store. This strategy is popular with retailers because the costs are lower than ship to home. It supports the habits of digital consumers and draws shoppers to stores.0% 20% 40%After 25-Dec25-Dec24-Dec23-Dec22-Dec21-Dec20-Dec19-DecWhen Holiday Shoppers Plan to Purchase Their Last Gift (2017)% of Respondents2018 holiday shopping trends: Procrastinating shoppersHOLIDAY SHOPPING TRENDSSource: NRFs December Consumer Holiday SurveyBefore 18-Dec18-Dec© Euromonitor International PASSPORT 10INDUSTRY: SECTOR Between 2012 and 2017, the unemployment rate in the US nearly halved, owing to solid job creation on the back of an improved economy. Youth unemployment also dropped over this period, and was in the lowest third amongst developed countries in 2017. The overall unemployment rate was 3.7% in September 2018, according to the US Bureau of Labor Statistics, which was the lowest unemployment rate seen in the US since 1969. The low unemployment rate will make it more difficult for retailers and shipping companies to meet their targets for hiring part-time seasonal employees to support end of year operations. As of September 2018 the Bureau of Labor Statistics estimated there were 6 million unemployed people in the US. Just for the companies in the table to the right to achieve their hiring targets, one in 10 unemployed people in the country would have to accept a seasonal position with one of these seven companies. Failing to hire enough seasonal employees for the end of year shopping season in the US is a major risk for retailers. Insufficient employees will make it challenging to meet delivery deadlines, manage in-store and omnichannel operations, and have the potential to create customer service problems that last into the new yearpany 2018 holiday hiring targetsTarget 120,000 employeesAmazon Inc 100,000 employeesUPS 100,000 employeesKohls 90,000 employeesMacys 80,000 employeesGap Inc 65,000 employeesFedex 55,000 employees2018 holiday shopping trends: Seasonal labour shortageHOLIDAY SHOPPING TRENDSSource: Company releases