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

Where US Consumers Will be Shopping This Holiday Season1280

KEY POINTS

Our report series How the US Shops takes a deep dive into shoppers’ expectations for the 2017 holiday season.

  • Consumer sentiment regarding the 2017 holiday season is broadly positive: more Americans say they will spend more this year compared with last year than say they will spend less.
  • Fully three-quarters of all holiday shoppers expect to buy from Amazon this year. That figure rises to 83% among those who say they expect to shop online and to 90% among Amazon Prime members.
  • E-commerce is set to be a more popular shopping channel than physical stores this holiday season, based on shopper numbers. Fully 82% of shoppers expect to buy holiday gifts online, while 77% expect to buy gifts in physical stores. The gap between planned online and in-store shopping is greater among younger age groups.
  • The number-one reason consumers plan to buy online is to avoid the holiday crowds. The top reason they plan to buy in-store is to be able to touch, see or try products in person.

Executive Summary

This holiday season, more US shoppers will shop online than in-store and three-quarters of them will turn to Amazon for gift shopping. Those are among the findings of our holiday 2017 outlook survey.

 

Consumer Sentiment Ahead of the 2017 Holidays

Sentiment is broadly positive: more consumers say they will spend more this year compared with last year than say they will spend less.

 

Which Retailers Consumers Expect to Buy Gifts From

Among those who expect to buy gifts this holiday season, fully three-quarters expect to buy from Amazon. That figure rises to 83% among those who expect to shop online and 90% among Amazon Prime members. Target and Walmart are the second- and third-most-popular destinations, respectively, with each set to attract just under half of holiday shoppers.

Amazon Prime members underindex at Walmart versus the total population, suggesting that Walmart loses shoppers to Amazon when consumers become Prime members.

Amazon, Target and T.J.Maxx are likely to be among the winners with millennials this holiday season. Walmart, Kohl’s and Costco are likely to be more popular among older consumers than among their younger counterparts.

 

Why Consumers Choose to Shop Where They Do

Low prices and breadth of range are important factors for consumers when they consider where to shop, but quality of products beats those two factors as the most important factor overall. Rapid delivery and buy-online, collect-in-store services rank low as considerations among holiday shoppers. Free delivery for online orders is ranked as more important by shoppers.

 

Online Shopping Set to Be More Popular than In-Store Shopping

The online channel is set to be a more popular shopping channel than physical stores this holiday season, based on shopper numbers. Fully 82% of survey respondents expect to buy holiday gifts online compared with 77% who anticipate buying gifts in physical stores. The online/in-store gap peaks among younger age groups: some 85% of holiday shoppers ages 30–44 years expect to shop online, likely reflecting a preponderance of busy parents in this age group.

The number one reason shoppers cite for buying online is to avoid the holiday crowds. The top reason they cite for buying in-store is to touch, see or try products in person.

 

Our How the US Shops Series

This is the first in our series of How the US Shops reports, each of which will take a deep dive into shopper behavior based on original consumer research.

Where-us-customers-will-be-shopping-001

 

Methodology

Our survey was carried out among 1,048 demographically representative, Internet-using American adults between August 11 and August 17, 2017.

Online surveys come with the caveat that they represent only Internet users—although such users made up fully 88% of the total US population in 2016, per the Pew Research Center. The proportion of the total population using the Internet has been climbing by around two percentage points per year, according to Pew data, so we expect our 2017 survey results to reflect the opinions of around 90% of the US population.

Consumer Sentiment Ahead of the 2017 Holidays

Where-us-customers-will-be-shopping-013

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.

Where-us-customers-will-be-shopping-014

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.

Where-us-customers-will-be-shopping-015

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.

Where-us-customers-will-be-shopping-016

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

Where-us-customers-will-be-shopping-002

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.

Where-us-customers-will-be-shopping-003

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.

Why Consumers Choose to Shop Where They Do

Where-us-customers-will-be-shopping-004

Low prices and breadth of range are important factors for consumers when they are deciding where to shop for holiday gifts. Yet quality of products beats those factors as the most important consideration for consumers when they choose a shopping destination.

Rapid delivery and buy-online, collect-in-store services are not important factors to most holiday shoppers. This suggests that retailers hoping to fight off Amazon by offering in-store collection may face disappointment. Shoppers rank free delivery as a more important factor.

Where-us-customers-will-be-shopping-005

Among Amazon Prime members (not charted):

  • Rapid delivery ranks higher, with 37% saying that it is important to them.
  • Free delivery is a more significant driver than it is among the general population, with 50% of Prime members saying this is important to them.

In the following two graphs, we show the top reasons consumers cite for choosing to shop where they do, categorized by where they say they will shop for gifts this holiday season.

Top Factors, by Retailer

Where-us-customers-will-be-shopping-006

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.

Where-us-customers-will-be-shopping-007

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

Where-us-customers-will-be-shopping-008

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.

Where-us-customers-will-be-shopping-009

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

Where-us-customers-will-be-shopping-010

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.

Where-us-customers-will-be-shopping-011

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.

Key Takeaways

E-commerce is set to prove more popular than in-store shopping this holiday season, based on current expectations and number of shoppers. Among millennials and young families, the Internet beats stores even more markedly.

Three-quarters of all shoppers expect to buy from Amazon this year. Among the subset of consumers who say they expect to shop online this holiday season, that figure rises to 83%. Both metrics are well ahead of those for Amazon’s closest rivals.

Where-us-customers-will-be-shopping-012

Some brick-and-mortar retailers may be counting on their buy-online, collect-in-store services to fend off the Amazon threat this holiday season. But consumers rank such collection services low as a factor that they consider when choosing where to shop: quality, price, location and availability will be the principal drivers for consumers as they decide where to shop this holiday season.