How the US Shops: Where Consumers Will Be Shopping This Holiday Season—and Why

Consumer Sentiment Ahead of the 2017 Holidays

We begin with a measure of consumer sentiment regarding spending this holiday season: we asked survey respondents how much they expect to spend, in total, on holiday 2017 compared with last year. The results suggest solid, though probably unspectacular, retail growth this holiday season, as more consumers expect to spend more compared with last year than expect to spend less.

A total of 22.7% of survey respondents expect to spend more on the holidays this year than last year, while a total of 21.3% expect to spend less. While the difference is encouraging, the total figure for those intending to spend more is driven largely by those expecting to spend only slightly more than last year. Meanwhile, the expectation to spend much less is more prominent than the expectation to spend much more.

We then asked those respondents who said they would be spending more or spending less this year why they would be doing so.

Personal financial circumstances and prospects are, understandably, the key drivers to spending more or less this holiday season. Interestingly, the outlook for the US economy figured more heavily as a factor among those who expect to spend less than among those who expect to spend more. Saving is another factor that is more important for those spending less than for those spending more.

Which Retailers Consumers Expect to Buy Gifts From

The survey questions discussed in the remaining sections of this report were asked only of those who indicated that they expect to buy gifts for the holidays.

Fully three-quarters of survey respondents expect to turn to Amazon for gifts this holiday season, versus about half who anticipate that they will purchase gifts from Target and Walmart. We also asked respondents if they expected to shop online and in physical stores, and we show those data later in this report. Among those who said they expected to shop online, Amazon pushes higher, to nearly 83% of respondents. Major multichannel competitors such as Target and Walmart tended to rank slightly lower among those who plan to shop online than among those who plan to shop in-store.

We asked respondents if they personally had an Amazon Prime membership, and some 44% said that they did.

As charted above, some 90% of these Prime members expect to shop at Amazon this holiday season, versus 75% of all respondents. Among the top five retailers, Walmart seems to lose out most among Prime members: it underindexes by 6.5 percentage points for holiday shopping among Prime members versus all adults.

The Top 10 Retailers, by Age

Above, we chart respondents’ expectations of shopping at the top retailers, by age.

• Amazon is slightly more popular among younger age groups than among older age groups. But we see more notable differences by age at Target and Walmart.
• Target is a more popular destination among millennials and family life stage shoppers (i.e., those ages 18–29 and 30–44) than it is among older consumers.
• By contrast, Walmart is most popular among middle-aged consumers—i.e., those ages 45–59.

Among the next five most popular retailers:

• J.Maxx is set to be a winner among young shoppers: some 26% of 18–29-year-olds surveyed expect to buy gifts from this retailer.
• Somewhat surprisingly, Macy’s registers as being more popular among younger consumers than among older ones.
• eBay looks to have lost its appeal among the youngest age group, which tends to be the most enthusiastic about online shopping—a worrying sign for an e-commerce marketplace.

Top Factors, by Retailer

Above, we chart the leading factors among respondents who expect to shop at the top five retailers in our survey.

• Those who expect to shop at Amazon are motivated by quality, but they are less motivated by price than are those who expect to shop at Target, Walmart or Kohl’s.
• Walmart shoppers are less motivated by quality of products than are shoppers at rivals such as Target and Amazon.

We chart the leading factors among respondents who expect to shop at the next five retailers, too.

• Those who plan to shop at Macy’s are motivated by quality and much less so by price.
• Costco shoppers are driven by price and availability of products.
• Somewhat surprisingly, T.J.Maxx shoppers do not rank price as highly as shoppers at some other stores do: quality and location are more important to T.J.Maxx shoppers.

Online Shopping Set to Be More Popular than In-Store

The online channel is set to be a more popular shopping channel than physical stores this holiday season, based on respondents’ current expectations and shopper numbers rather than sales. Our survey found that Internet shopping enjoyed a lead of 4.4 percentage points over in-store shopping in terms of expected shopper participation.

Our research confirms that physical stores are losing millennial and family life stage shoppers to e-commerce: consumers who are not yet in their mid-forties are significantly more likely to shop online than in physical stores this holiday season. Expectations of buying gifts online peak among holiday shoppers ages 30–44, likely reflecting a preponderance of busy parents in this age group.

This is significant in part because these consumers are of growing importance as holiday shoppers. They are typically in the stage of life where their incomes are growing and they are setting up households and establishing families. Related to this, our survey found that younger age groups are more likely than older age groups to say they will spend more this holiday season than last year.

Reasons for Shopping Online and In-Store

The ease and convenience of shopping online are effectively the top drivers for e-commerce over the holiday period. Breadth of choice, special offers or exclusive products are secondary.

Relatively few consumers now believe that prices are cheaper online than in stores: gone are the days when e-commerce was synonymous with cut-price, suggesting that messaging and price-parity efforts by multichannel retailers have been successful.

The ability to see and touch products in person and the option to browse for gift ideas are the most popular reasons, by substantial margins, that consumers cite for expecting to shop in physical stores this holiday season.

The popularity of browsing for gift ideas and the continued enjoyment of shopping in stores suggest that appealing, attractive store environments will continue to pull in shoppers—at least at holiday time.