Holiday Spend Report – The 3 Trends that are Driving Holiday Purchases

September 26, 2017 Posted by - CMO

The holiday season is the biggest consumer spending event of the year, making it a critical time for retailers to boost their annual bottom line. While Black Friday used to be the primary marketing event for capturing holiday spend, when and where consumers spend for the holidays is changing. To ensure their cash registers stay ringing all season long, retailers need to align their marketing efforts with evolving buying behaviors.

The good news is that holiday spend is on the rise. Cardlytics recently analyzed year-over-year holiday spend from 2015 to 2016. Holiday sales increased by 1.9%. This is a nice change from 2014 to 2015, where spend had decreased. But, as you can imagine, this increase in spend is not equally spread across every channel throughout the holiday season.

Online is growing, but brick & mortar captures the majority of spend

It’s easy to imagine that most of holiday retail spend comes from online channels. However, in 2016, we saw that online-only retailers accounted for only 10% of holiday spend. While small, this percentage is growing year over year. Online brick & mortar (the online channel for retailers with a physical store) accounted for 8% of spend. And, while in-store spend is declining year over year, it still made up 82% of holiday spend in 2016. Because of this, engaging audiences across channels, both online and in-store, is imperative for a successful holiday season.

Online-only retailers and online brick & mortars should offer early and late shipping deals that are shareable via email or social to capture the increased online spend. Making the deals shareable allows retailers to reach consumers not on their mailing lists. Online brick & mortar stores should consider free ship-to-store deals, which encourages online shopping, but also gets foot traffic in the store. And, brick & mortars without an online presence should consider online marketing campaigns, like cash-back deals that reach consumers in their online and mobile banking accounts while they’re already thinking about spending and saving money.

Black Friday is losing relevance

But, which shopping channel consumers are opting for isn’t the only thing marketers should understand when building their holiday marketing campaigns. When consumers are shopping is critical, too. As retailers are offering earlier November deals and consumers are increasing their confidence in last-minute holiday shipping, Black Friday and Cyber Monday deals are continuing to decline in importance. A whopping ~ 40% of spend occurs in the first 4 weeks before Black Friday. And, 14% of total holiday sales occur the week before Christmas. To generate the greatest holiday revenue, marketers should not center marketing around Black Friday only. Targeted, well-timed campaigns will enable retailers to capture spend throughout the season.

Consumers are choosing alternative categories

As big box/general merchandise retailers offer more children’s clothes and toy gifts, we’ve seen traditional retailers, like department stores, experience a decline in holiday spend, and less traditional retailers, like pet stores, experience an increase. In 2016, we saw big box/general merchandise store spend increase by 5% and pet store spend increase by 4%. Both children’s toys & apparel and department stores saw a decrease in spend of 7%, respectively. Retailers who execute multi-pronged marketing campaigns that highlight specific gifts and gift variety will be more likely to capture consumers with specific gift needs.

With holiday spending on the rise, retailers have an opportunity to capture more spend than last year. But, that also means retailers will be competing harder to get their share of the increased spend. Aligning holiday marketing campaigns with the purchase behaviors of holiday shoppers will be imperative for retailers who want to increase their bottom line this season.