US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW - Spending Strength Across Ecommerce and Traditional Retail, but Uncertainty Looms Ahead - eMarketer
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US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW Spending Strength Across Ecommerce and Traditional Retail, but Uncertainty Looms Ahead FEBRUARY 2019 Andrew Lipsman Contributors: Rebecca Chadwick, Cindy Liu, Karin von Abrams, Yoram Wurmser
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW: SPENDING
STRENGTH ACROSS ECOMMERCE AND TRADITIONAL RETAIL, BUT
UNCERTAINTY LOOMS AHEAD
The 2018 holiday season was one of the best in recent years, with strong growth rates posted both online and at
brick-and-mortar on the back of a robust consumer economy. But the conditions might not be as favorable as we
look ahead to the 2019 holidays.
■■ How much did retail spending increase during the
Top 10 US Holiday Season Shopping Days, Ranked by
2018 holiday season? Total retail spending was up Retail Ecommerce Sales, 2018
5.4% to $998.32 billion, falling just shy of our earlier billions
forecast of $1.002 trillion, with the shortfall coming
1. Cyber Monday (Nov 26) $7.87
from the unexpected drop in gas prices to end the year.
2. Black Friday (Nov 23) $6.22
Traditional retail was very strong, with brick-and-mortar
sales rising 3.9% to $874.42 billion and ecommerce 3. Thanksgiving (Nov 22) $3.68
soaring 16.7% to $123.90 billion. 4. Nov 25 $3.39
5. Nov 24 $3.05
■■ How much was spent online on Thanksgiving, Black
Friday and Cyber Monday? Cyber Monday was the 6. Nov 27 $2.97
heaviest online spending day in history, with a reported $2.87 7. Green Monday (Dec 10)
$7.87 billion. Meanwhile, Thanksgiving and Black Friday 8. Dec 11 $2.55
both continue to experience significantly above-average 9. Dec 17 $2.52
growth rates as they become more important shopping
10. Dec 9 $2.41
days for ecommerce.
Note: represents activity on Adobe's platform, broader industry metrics
■■ What is the forecast for holiday sales in 2019? We may vary
Source: Adobe, Jan 31, 2019
expect that the 2019 holiday season will see healthy 245090 www.eMarketer.com
US retail spending growth of 3.7% to $1.035 trillion.
However, with several economic factors now weighing KEY STAT: Cyber Monday was the top spending day of the
on the consumer economy, this growth rate represents 2018 holiday season, with $7.87 billion, but Thanksgiving
a noticeable deceleration vs. 2018. surprised at No. 3 with $3.68 billion.
■■ Which retailers were the winners and losers of the
2018 holiday season? Amazon, Walmart and Target
were among the big retailers that drove strong sales
increases during the holidays to finish off 2018 on a CONTENTS
high note. Meanwhile, several department stores and
mall anchors like JCPenney, Macy’s, Sears and Kohl’s 2 US 2018 Holiday Season Review and 2019 Preview:
struggled to capture the same momentum. Spending Strength Across Ecommerce and Traditional
Retail, but Uncertainty Looms Ahead
WHAT’S IN THIS REPORT? This report includes a review 3 Holiday 2018 Review: Strong Consumer Economy Drives
of the US 2018 holiday season and an early preview Strength Across Retail Channels
of the 2019 holidays, including our latest US retail and
ecommerce spending forecast. 9 Holiday 2019 Preview: Risk Factors Abound
12 Looking Ahead to the 2019 Holiday Season:
Key Takeaways for Retailers
12 eMarketer Interviews
13 Read Next
13 Sources
13 Editorial and Production Contributors
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 2
HOLIDAY 2018 REVIEW: STRONG FAVORABLE ECONOMIC CONDITIONS
CONSUMER ECONOMY DRIVE SPENDING SURGE
DRIVES STRENGTH ACROSS The continued surge in consumer spending through
RETAIL CHANNELS the holidays can be attributed to the overall favorable
economic conditions. With GDP growth escalating, the
The 2018 retail holiday season was exceptionally unemployment rate near record lows, wage growth on
strong, having some of the highest growth rates the rise and consumer confidence at multiyear highs,
for both brick-and-mortar and ecommerce sales Americans brought more disposable income into the
holiday season. According to CivicScience, 30% of US
since 2011.
holiday shoppers said they spent more than they intended
Total retail holiday season sales climbed 5.4% to during the 2018 holiday season vs. 21% who said they
$998.32 billion, bolstered by strength in brick-and-mortar, spent less.
which increased 3.9% to $874.42 billion, or seven out
of every eight dollars spent during the holidays. Retail Did US Holiday Shoppers Spend More or Less than
ecommerce sales jumped 16.7% to $123.90 billion, They Intended to on the 2018 Holiday Season?
fueled largely by strong gains in mobile commerce, % of respondents
which surged 31.7% to $53.28 billion. Although mobile Stayed within budget 48%
accounted for just 5.3% of total retail sales, it drove Spent more 30%
25.3% of the season’s overall spending gains.
Spent less 21%
Note: n=1,757 ages 18+; numbers may not add up to 100% due to rounding
US Retail Holiday Season Sales, 2017 & 2018 Source: CivicScience as cited in company blog, Jan 3, 2019
billions, % change and % of total 244222 www.eMarketer.com
2017 2018 % % of % of 2018
change total 2018 growth Nevertheless, even optimistic consumers are
spending contribution
price-sensitive and have come to expect incentives to
Brick-and- $841.41 $874.42 3.9% 87.6% 65.0% purchase during the holidays. Deloitte’s “2018 Holiday
mortar/
in-store retail Survey” found that 95% of consumers said price
Retail $106.14 $123.90 16.7% 12.4% 35.0% discounts most appealed to them, while 75% said they
ecommerce*
wanted free shipping.
—Desktop $65.28 $70.62 7.5% 7.1% 9.7%
and other
(includes voice)
—Mobile $40.44 $53.28 31.7% 5.3% 25.3% What 2018 Holiday Season Promotional Offers Most
Appeal to US Internet Users?
Total $947.55 $998.32 5.4% 100.0% 100.0%
% of respondents
Note: sales are for Nov and Dec of each year; excludes travel and event
tickets, payments (such as bill pay, taxes or money transfers), food services
and drinking place sales, gambling and other vice good sales; *includes Price discounts 95%
products or services ordered using the internet via mobile devices,
regardless of the method of payment or fulfillment Free shipping 75%
Source: eMarketer, Feb 2019
Free gifts 52%
245111 www.eMarketer.com
Loyalty points 32%
Total holiday sales performed very much in line with our
29% Buy more, save more
pre-holiday expectations, but did fall on the low side of
our $1 trillion forecast by a couple billion dollars. However, 9% Exchange offers
that shortfall was largely attributable to an unexpected Note: n=3,275 ages 18+
drop in US gas prices, with fuel sales included in Source: Deloitte, "2018 Holiday Survey of Consumers," Oct 23, 2018
242951 www.eMarketer.com
our definition of total retail. National gas prices, after
spending about half of 2018 over $2.75 per gallon and
over $2.90 as recently as October, unexpectedly dropped
to $2.30 by the end of December, according to GasBuddy.
Performance in core retail categories, across both
brick-and-mortar and ecommerce, were very close to our
preseason estimates.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 3BRIGHT SPOTS FOR BRICK-AND-MORTAR And some of these implementations aren’t always
flashy, but instead relatively simple and inexpensive.
Brick-and-mortar retail sales strengthened throughout On Thanksgiving, Walmart offered shoppers free coffee
2018 and continued to thrive during the holidays, and cookies to add to the festive holiday atmosphere.
especially for those that invested in a better customer Target remodeled hundreds of its stores to make more
experience. For many, that meant store upgrades to room for toys—a category that was up for grabs with
provide a cleaner, more well-lit environment and Toys R Us filing for bankruptcy in 2018—and introduced
higher-quality merchandising displays. Executing on “hours of joy” events, featuring fictional character meet
in-store technology also helped streamline checkout and and greets that allowed kids to test-drive the season’s
equip sales staff to better serve their customers. most popular toys. And direct-to-consumer (D2C) home
furnishings brand Burrow offered free drinks and a homey
All of these improvements contributed to reducing the environment where shoppers could relax and watch
hassle and making shopping an all-around more enjoyable movies while testing out the furniture.
experience. Some merchants doubled down on a more
amped-up holiday store experience to get shoppers, while
For more information on D2C brands, see our January
others opted to project calm in the eye of the retail storm.
2019 report “Direct-to-Consumer Brands 2019: How Digital
But both tactics focused on experience to lure shoppers
Natives Are Disrupting Traditional Brands and Retailers.”
into stores.
Brick-and-mortar merchants also lured shoppers to their
“Some of the strategies that seem to be working for stores with flexible fulfillment options—most notably,
customers are things like ‘retail-tainment’ and brand buy online, pick up in-store (BOPUS), aka click-and-collect
events,” said Katherine Cullen, director of retail and services. “Retailers that seem to be performing well
consumer insights at the National Retail Federation (NRF). are those that recognized the convergence of digital
“Nearly half of consumers say they attended at least one and physical and have invested in building a strong
retail-tainment event in the past year, and of those, 82% multichannel experience,” Cullen said. “We know that
are interested in similar events in the future.” fulfillment options like buy online, pick up in-store appeal
to shoppers, and this was a big focus for many retailers
US Internet Users Who Attended a Retailer or Brand over the 2018 holiday season.”
Event* in the Past Year, by Generation, Nov 2018
% of respondents According to Adobe, holiday season BOPUS orders
26% Baby boomers (born 1946-1964) were up a staggering 50% from the prior year among
multichannel retailers.
Generation X (1965-1980) 47%
Millennials (1981-1994) 66%
+50%
Generation Z (1995-2000) 53%
Total 46%
Note: *e.g., early/exclusive access to item/sale, a party, a pop-up shop
Source: National Retail Federation (NRF), "2018/2019 Winter Consumer
View," Jan 15, 2019
244590 www.eMarketer.com
Year-over-year growth in US BOPUS orders
during the five-day holiday weekend.
Adobe Analytics, “Holiday Recap 2018,” Jan 15, 2019
www.eMarketer.com
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 4The primary reason for this surge is to avoid shipping accounted for 60% of online shopping traffic and 40%
fees, according to NRF research conducted by Toluna. of sales, with smartphones accounting for 51% of traffic
Close to two-thirds of US internet users listed this option and 31% revenues. Compared with last year, smartphone
as a way to avoid paying for shipping costs, followed commerce jumped 56.4%, while sales via desktops and
by immediacy (37%) and retailer discounts (36%). tablets both increased by single-digit percentages: 4.7%
Package security (23%) was also a factor and (perhaps and 4.3%, respectively.
underappreciated) motivator behind in-store pickup.
Share of 2018 US Holiday Season* Retail Ecommerce
Why Are US Internet Users Choosing Buy Online, Pick Site Visits vs. Revenues, by Device
Up In-Store? % of total
% of respondents, Nov 2018
Tablet Tablet
To avoid paying for shipping
9% 9%
64%
Needed something right away
37% Smartphone Smartphone
Desktop Desktop
31% 51%
60% 40%
Received a discount or promotion to try it
36%
Had to go to the store anyway
31%
Revenues Visits
It was more secure than having items delivered to my home
Note: represents activity on Adobe's platform, broader industry metrics
23% may vary; *Nov-Dec
To see the item in person Source: Adobe, "Holiday Recap 2018," Jan 15, 2019
20% 244554 www.eMarketer.com
Note: ages 18+; among those who use BOPUS
Source: National Retail Federation (NRF) with Toluna Analytics, "2018/2019
Winter Consumer View," Jan 15, 2019
244592 www.eMarketer.com
SHIPPING WAS FREE, FAST AND ON TIME
Double-digit growth in ecommerce spending continues
The fact that retailers are providing direct financial to be fueled by increasing convenience and decreasing
incentives demonstrates how driving click-and-collect costs to the consumer. According to Salesforce, US
activity can turn into a win-win for consumers and online shoppers benefitted from even higher levels
particularly retailers, who can bolster margins and boost of discounting and incidence of free shipping on their
incremental sales. purchases in 2018. Across every week of the holidays
between Thanksgiving and Christmas, the percentage of
orders that were discounted climbed vs. last year, with a
ONLINE OUTPACES FORECASTS ON peak of 30% during the week of November 20-26.
STRENGTH OF SMARTPHONE COMMERCE Share of US 2017 vs. 2018 Holiday Season Orders that
Brick-and-mortar retail may have been a surprising Were Discounted vs. Shipped Free, by Shopping
bright spot this year, but its gains did not come at Period
% of total
the expense of ecommerce. In fact, online spending
2017 2018
performed noticeably better than the industry’s already
Discounted Shipped Discounted Shipped
optimistic expectations. free free
Cyber Week 29% 84% 30% 85%
Preseason predictions from Adobe projected that Post-Cyber Week 24% 73% 25% 76%
ecommerce spending would rise 14.8% to $124 billion, Mid-season 18% 70% 21% 75%
but its final tally showed online sales jumping 16.5% to Pre-Christmas 19% 67% 22% 71%
$126 billion. Comscore forecast growth in online holiday Christmas & 25% 64% 24% 68%
Boxing Week
spending at 18% to 19% and saw results come in above
Note: represents activity tracked by Salesforce, broader industry metrics
the range, growing 19.4% to $115 billion. may vary; Cyber Week: Tues, Nov 20–Mon, Nov 26; Post-Cyber Week: Tues,
Nov 27–Mon, Dec 3; Mid-Season: Tues, Dec 4–Mon, Dec 10; Pre-Christmas:
Tues, Dec 11–Mon, Dec 17; Christmas and Boxing Week: Tues, Dec 18–Wed,
Gains in ecommerce this season were fueled largely by Dec 26
Source: Salesforce, "2018 Holiday Season Shopping Report," Jan 14, 2019
an increase in mobile shopping and buying, particularly
244502 www.eMarketer.com
on smartphones. According to Adobe, mobile traffic
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 5The same was true of the percentage of orders with free Michael Klein, Adobe’s director of industry strategy and
shipping, which peaked at 85% during that same week. marketing for retail, travel and CPG, attributed the early
Free shipping was likely boosted by competition during start to urgency in grabbing the high-demand products.
the holidays, as Target promoted free two-day shipping “There are some items we know will sell out, so ‘fear
on all orders with no minimum purchase, precipitating of missing out’ is certainly something that will draw in
a response from Amazon with the same offer for all US early purchases,” he said. “We also know that consumer
customers, including non-Prime members. confidence at that time of the year was very high, so that
certainly contributed to it.”
As free shipping drives online order growth, logistics can
become more of a challenge. But according to ShipMatrix, According to an NRF survey conducted by Prosper
the on-time delivery rates for each of the three major Insights & Analytics, 165.8 million US adults shopped
providers in the US neared perfection. US Postal Service across channels during the five-day period from
led the tightly clustered trio with 98.8% of shipments Thanksgiving through Cyber Monday. More than half of
delivered on time, followed closely by UPS at 98.3% and respondents (54%) shopped both online and in-store,
FedEx at 97.6%. UPS showed the greatest improvement and in a sign of the times, online-only shoppers (25%)
vs. 2017 (up 3 percentage points), while all three raised outnumbered in-store-only shoppers (21%).
the bar on their performance from the prior year.
How Did US Internet Users Shop During Thanksgiving
On-Time 2017 vs. 2018 Holiday Season* US Delivery Weekend 2018*?
Rate for FedEx, UPS and the US Postal Service millions and % of total
% of total and % change
2017 2018 % change
FedEx 97.4% 97.6% 0.2% In-store only
34.7 (21%)
UPS 95.3% 98.3% 3.0%
US Postal Service 98.2% 98.8% 0.6% Multichannel
Note: represents activity tracked by ShipMatrix, broader industry metrics 89.7 (54%)
Online only
may vary; US Postal Service data is for USPS Parcel Select, a ground
41.4 (25%)
delivery service for bulk packages; FedEx and UPS data is for all services
combined; *2017 holiday season was from November 19-December 30 and
the 2018 holiday season was from November 18-December 29
Source: ShipMatrix as cited in Commercial Apparel, Jan 8, 2019
244559 www.eMarketer.com Total=165.8 million
Note: ages 18+; *Thanksgiving Day, Nov 22-Cyber Monday, Nov 27
“The enormous focus of the last few years on their Source: National Retail Federation (NRF), "Thanksgiving Holiday Trends
ability to handle the 50%-plus spike in volume during Consumer Survey" conducted by Prosper Insights & Analytics, Nov 27, 2018
243364 www.eMarketer.com
peak season created a heightened importance on doing
[on-time delivery] well,” said Satish Jindel, president of Holiday shopping now begins in earnest on Thanksgiving
ShipMatrix. “Having 32 days for peak season helped as the lead-in to Black Friday, followed by the rest of
all three carriers.” Jindel pointed to expanded capacity the holiday weekend, and finally culminating on Cyber
and technology improvements in helping UPS make the Monday as the heaviest online shopping day of the year
greatest strides. (together the five-day period is known as the “Cyber
Five”). Historically these important promotional events
were segregated into offline and online holidays, but in
THANKSGIVING, BLACK FRIDAY AND recent years—and particularly since the advent of mobile
shopping—the lines have blurred.
CYBER MONDAY
Thanksgiving was once a day for family, feasts and
Online holiday shopping got out to a fast start this year,
football, but when brick-and-mortar retailers opened
well before the peak promotional period kicking off on
the floodgates to Black Friday with early store openings
Thanksgiving. During the first three weeks of the holiday
in 2011, a new day for shopping began to take shape.
season (November 1-20), ecommerce sales jumped
Around the same time, smartphones joined Americans at
ahead of pace with 16.7% growth to $31.9 billion,
the dinner table and on their couches, thus cementing the
according to Adobe—nearly 2 percentage points ahead of
day’s status as a day retailers needed to take seriously.
the company’s holiday growth forecast.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 6And the event has grown only more important over The Cyber Five period was punctuated by the $7.9 billion
time. According to Adobe, Thanksgiving Day generated in spending on Cyber Monday, ranking it as the heaviest
$3.7 billion in ecommerce sales with an impressive online spending day of the year once again, according to
28.0% growth rate. Even more surprising, Thanksgiving Adobe. $5.0 billion—or about 63% of sales—came from
ranked as the third-heaviest online spending day of desktop, a much higher percentage than the desktop
the season. sales on Thanksgiving and Black Friday, both of which
were more mobile-heavy.
US Cyber Week Retail Ecommerce Sales, by Shopping
Day, 2018 Online sales growth for the big promotional days was
billions and % change vs. prior year driven by improved spend per visit. Comscore data
$7.9 showed that, for each of the three days, growth in
(19.7%)
spending outstripped growth in digital retail visits by at
$6.2 least double, which could be due to better conversion,
(23.6%) increased average order values (AOVs) or a combination
of the two. Similar to the Adobe figures, the strongest
$3.7 growth rates were seen on Thanksgiving, followed by
$3.4
(28.0%) $3.0 (25.6%) Black Friday and finally Cyber Monday.
(25.5%)
US Thanksgiving, Black Friday and Cyber Monday
Total Digital Retail Site Visits vs. Digital Spending,
2017 vs. 2018
% change
Thanksgiving Black Friday Small Business Super Cyber
(Nov 22) (Nov 23) Saturday Sunday Monday Digital retail site Digital spending
(Nov 24) (Nov 25) (Nov 26) visits
Note: represents activity on Adobe's platform, broader industry metrics Thanksgiving 15% 38%
may vary; total 2018 Cyber Week retail ecommerce sales=$24.2 billion Black Friday 13% 36%
Source: Adobe, "Holiday Recap 2018," Jan 15, 2019
244931 www.eMarketer.com Cyber Monday 11% 28%
Note: includes desktop and mobile
Black Friday immediately followed with 23.6% growth Source: Comscore Multiplatform, Comscore e-Commerce and
m-Commerce as cited in company blog, Nov 29, 2018
to $6.2 billion in sales—a remarkably strong rate on an 243680 www.eMarketer.com
already substantial sales figure. That story stands in
contrast to the increasingly popular narrative that Black
Friday is somehow becoming less important, which
likely traces to the changing patterns at brick-and-mortar
APPAREL SHINES AMONG HOLIDAY
retail. According to ShopperTrak, Black Friday foot traffic PRODUCT CATEGORIES
edged down slightly by 1%, but Thanksgiving Day Despite the overall growth across the retail sector,
traffic increased to help offset that effect. this past holiday season had its share of winners and
losers. Performance was dictated both by broader
“The idea that Black Friday is losing significance has
market trends and the specific strategies and tactics of
always confused me,” said Brian Field, senior director
individual retailers to capture their fair share of consumer
of retail consulting at ShopperTrak. “You would have
spending growth.
to probably triple Super Saturday [the Saturday before
Christmas] traffic to make it as significant as Black Friday. Most product categories experienced positive growth
That’s how great the impact of Black Friday is.” rates, but not every sector was immune to bad news.
Going into the holiday season, we projected that
In other words, Black Friday remains a massive offline
apparel/accessories and consumer electronics would be
shopping event, and when coupled with its increasingly
the top categories fueling growth—that prediction turned
significant online component, remains far and away the
out to be half true.
most important shopping day of the year. Black Friday’s
considerable ecommerce gains have a lot to do with
mobile. Whether Americans are hitting the stores or
lounging around at home that day, mobile shopping is
likely a part of the equation.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 7Apparel and accessories was the true standout this What Product Category Are US Digital Shoppers Most
holiday season. As one of the biggest product categories, Likely to Return from a Digital Purchase?
it is often a bellwether for discretionary retail and tends to % of respondents, 2017 & 2018
align pretty closely with the overall growth picture—both Apparel
for online and brick-and-mortar. This year, the category 43%
posted results well ahead of industry benchmarks. 29%
Mastercard reported that total retail sales for apparel Consumer electronics
12%
in the US grew 7.9% year over year, its best growth
16%
rate since 2010 and nearly 3 percentage points higher
Home products
than total retail growth of 5.1%. Rakuten Intelligence
12%
reported holiday retail ecommerce sales for the apparel 11%
category climbed 27%, outpacing the overall holiday sales Footwear & accessories
benchmark of 21%. 11%
11%
Other
Holiday Retail Ecommerce Sales Growth, by Category,
Nov 1-Dec 31, 2018 22%
% change vs. same period of prior year 33%
Food 49% 2017 2018
Apparel 27% Note: ages 21-65
Source: Narvar, "The State of Returns: What Today's Shoppers Expect," Nov
Home improvement 23% 14, 2018
243205 www.eMarketer.com
Home 21%
Unlike its counterpart, the electronics and appliances
Toys 18%
category struggled to tread water this past holiday
Health & beauty 17%
season. Mastercard reported that total retail sales for
Shoes 17% the category fell 0.7%. Meanwhile, Rakuten Intelligence
Electronics 16% reported that ecommerce sales for electronics grew 16%,
Sporting goods 12% several points below the benchmark.
Other 17%
Why did the category, which might otherwise appear to
Total 21%
be booming thanks to the rapidly expanding slate of smart
Note: represents activity on Rakuten Intelligence's platform, broader home products like smart speakers, video doorbells and
industry metrics may vary
Source: Rakuten as cited in company blog, Jan 7, 2019
security cameras, fall short this year? A key culprit might
245098 www.eMarketer.com be softness among large household appliances, which
despite having a strong past few years as consumers
A caveat to apparel’s success, however, is the category’s
invested in home upgrades, have recently taken a hit.
high incidence of returns, particularly for online purchases.
While improvements in the ease of returns has helped
In a January 2019 article from The New York Times,
grow the category online, it has not necessarily done
economics reporter Jim Tankersley wrote that “You may
so in the most profitable manner. But a November
not have appreciated it at the time—golden eras have
2018 study from retail postpurchase solutions provider
a habit of coming and going like that—but a five-year
Narvar suggests that apparel may be improving on this
stretch that started in 2013 was a pretty great time to buy
dimension. While apparel still topped the list of categories
a washing machine.” Now, however, tariffs are having a
that US digital shoppers are most likely to return, it
noticeable impact on their price tags, which has deterred
experienced a big drop over the past year—from 43% to
consumers from perpetuating this upgrade cycle.
29% of respondents.
According to the Bureau of Labor Statistics, as cited in
The New York Times, following several consecutive years
of year-over-year price declines for washing machines,
prices in 2018 surged by 13%.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 8On the consumer electronics side, Ken Cassar, vice Top 10 US Retail Sites, Ranked by Unique Visitors,
president and principal analyst at Rakuten Intelligence, Dec 2018
in a blog post attributed the softness to “the continued millions and % change vs. prior year
move toward lower prices in the category: the TV that 1. Amazon sites 206.1 (4%)
cost me $1,000 last year might have cost as little as $500
2. Walmart 131.9 (4%)
this year.”
3. eBay 109.4 (-3%)
4. Target 79.1 (-5%)
AMAZON TOPS ONLINE RETAILERS, BUT 5. Apple 72.8 (13%)
BRICK-AND-MORTARS ALSO FARE WELL
6. Kohl's 59.1 (1%)
7. Etsy 56.0 (18%)
The conversation for top-performing individual retailers 8. Best Buy 55.0 (6%)
begins with Amazon, which casts a long shadow over the 9. Samsung 52.0 (17%)
retail sector. According to a July 2018 RetailMeNot survey
10. Macy's 46.1 (-7%)
of retailers conducted by Kelton, 85% of respondents
either completely agree or somewhat agree that they Note: ages 18+; desktop and mobile; includes display and video via
browsers and mobile apps
feel more pressure to compete with Amazon during the Source: Comscore, Jan 17, 2019
holidays than other times of year. 244777 www.eMarketer.com
Though Amazon once again flexed its muscles,
Do US Retailers Agree They Feel More Pressure to brick-and-mortar retailers also reached the winner’s circle
Compete with Amazon During the Holiday Season by leveraging their competitive advantages. “Something
than Other Times of the Year?
that stood out to me is the counterbalance of physical
% of respondents, July 2018
stores against online-only retailers like Amazon, because
they were able to truly leverage those last-minute
Completely
Somewhat purchases from their physical store footprints,” said Ed
disagree
disagree
4%
10% Kennedy, senior director of commerce at Episerver.
Completely agree Walmart took advantage of its expansive store footprint to
Somewhat agree 50%
35% drive click-and-collect purchases and command a strong
No. 2 position, with 131.9 million online visitors; Target
ranked fourth with 79.1 million. Best Buy posted a solid
gain, growing 6% to 55.0 million visitors to rank eighth.
Note: n=203; numbers may not add up to 100% due to rounding
Source: RetailMeNot, "2018 Holiday Insights Guide" conducted by Kelton,
Sep 20, 2018 On the online pureplay side of the ledger, eBay ranked
241629 www.eMarketer.com
third overall with 109.4 million visitors, while Etsy climbed
Not surprisingly, Amazon tops the list of most-visited two spots to No. 7 with 56.0 million visitors, an 18% jump
websites during the holidays. Comscore data for year over year. The fast-rising marketplace for handmade
December 2018 found that the number of unique visitors crafts has proved to be an ideal destination for bespoke
to Amazon sites reached 206.1 million, up 4% from and unique holiday gifts.
2017. Amazon had a record-breaking holiday season with
the new Echo Dot and Fire TV Stick 4K with Alexa Voice
Remote ranking as its best-sellers, according to the
company’s post-Christmas press release. “This season
HOLIDAY 2019 PREVIEW: RISK
was our best yet, and we look forward to continuing FACTORS ABOUND
to bring our customers what they want, in ways most
convenient for them in 2019,” said Jeff Wilke, CEO of Retailers basking in the glow of the 2018 holiday
Worldwide Consumer at Amazon. “In the US alone, season will need to keep their revelry in check as they
more than 1 billion items shipped for free this holiday pivot their attention to early-stage planning for the
with Prime.”
2019 holidays. And the outlook is not nearly as rosy,
with economic volatility and other market factors on
the horizon.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 9MACROECONOMIC FACTORS GROWING gas prices, which has the effect of a large tax cut for
US consumers that can be funneled right back into the
MORE VOLATILE consumer economy.
While macroeconomic conditions can be difficult to
predict, the 2019 landscape looks to be on shakier ground
than in 2018. The confluence of a strong labor market, RISK OF CONTAGION IN ONGOING
positive consumer sentiment, an elevated stock market
and modest price inflation were all factors that bolstered
RETAIL APOCALYPSE
the retail market last year, but 2019 is less likely to be Despite overall consumer spending habits, the shift away
as fortuitous. from consumer footfall in shopping malls continues,
save for a recent uptick in December, as seasonal retail
At the moment, the labor market appears to be on the flooded into vacant storefronts. According to commercial
strongest footing. According to the US Bureau of Labor real estate data provider Reis, the mall retail vacancy rate
Statistics (BLS), nonfarm payrolls grew by 312,000 in improved marginally to 9.0% in Q4 2018 from 9.1% the
December 2018 and 304,000 in January 2019, some of prior quarter. The numbers were noteworthy only because
the best readings since the earliest days of climbing out they showed a rare—and what will ultimately prove
of the Great Recession. Meanwhile, real wage growth temporary—reversal in the trend.
also continued to tick higher amid the tight labor market,
posting a 3.2% year-over-year gain in December to close Almost immediately following the 2018 holidays, we
out the year. were once again met with headlines of more store
closures on the horizon. Sears continues to shutter
These factors typically provide a sturdy foundation for locations; Gymboree announced its bankruptcy filing in
positive consumer sentiment, but recent data has shown early January as it faces closures for its 900 locations;
a sharp decline. The University of Michigan Consumer and department stores Macy’s, JCPenney and Kohl’s all
Sentiment Index dropped to 90.7 in January, down announced store closings in the wake of a disappointing
from 98.3 in December and well below the consensus holiday season, as they look to trim their real estate
estimates of 96.8, with concerns over the partial footprint for underperforming stores.
government shutdown weighing on consumers’ minds.
Top 10 US Retailers, Ranked by Store Openings vs.
The economic picture gets even murkier with the stock Closings, Jan 1-Feb 1, 2019
market, which experienced a sharp downturn to end 2018 Openings Closings
as the Dow plunged 8.7% to mark the worst December 1. Dollar General 975 1. Gymboree 749
since the Great Depression. Having begun 2018 on a 2. Aldi 159 2. Ascena Retail 400
sharp upswing, the market reversed course to end the 3. Ulta 80 3. Destination Maternity 117
year in negative territory and ramped up chatter of a major 4. Sprouts Farmers Market 30 4. Shopko 105
market correction and looming recession. Despite its 5. Murphy USA 27 5. Chico's 83
recent rebound in early 2019, concerns of an impending 6. Costco 20 6. Sears 72
downturn persist. Should it materialize, there would likely 7. Casey's 20 7. Vera Bradley 50
be a negative wealth effect for affluent consumers. 8. Indochino 20 8. Kmart 48
9. Shopko 20 9. Lowe's 20
Finally, and perhaps most significantly, rising prices 10. Dry Goods 19 10. Macy's 8
Note: total store openings=1,399; total store closures=1,678;
could crimp the spending habits of US consumers in closings/openings are calendarized to attribute them in the year in which
2019. The first risk factor is the trade war with China, they fell or are expected to fall; totals include retailers that have
announced multi-year store opening plans which have been recorded
which increases the cost of many imports across retail based on an estimate for each year; includes Aldi's 5-year plan for
openings until 2022
sectors—on everything from furniture to consumer Source: Coresight Research, "Weekly Store Openings and Closures Tracker
electronics to apparel—the effects of which have not 2019 #5," Feb 1, 2019
245112 www.eMarketer.com
yet been fully realized. Meanwhile, a tight labor market
and growing wages has the Fed continuing to raise
interest rates, which could slow down the massive US
housing market and the retail expenditure associated
with updating and furnishing new homes. One possible
buffer to rising consumer prices is the recent drop in
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 10Many of these store closings are part of the natural life While Jindel ultimately believes that the parcel companies
cycle for retailers amid a period of retail transformation. should be able to achieve similar service levels in
“When retailers get into trouble, the easy thing to do is 2019, the massive increase in expected daily volume is
cut costs. Most struggling retailers have the expense nevertheless a significant risk factor that could result in
optimization hammer and are always looking for the logjams and delays if capacity isn’t carefully planned for.
next nail,” retail consultant Steve Dennis said in a recent
Forbes article. “What’s harder, but ultimately far more
important, is to become truly customer-obsessed
and to invest behind being more remarkable than the
EMARKETER 2019 US RETAIL HOLIDAY
competition. Until that happens ... shrinking is not going SEASON FORECAST
to be the answer.”
With all of the aforementioned dynamics factoring into
our view, we are forecasting a solid 2019 holiday retail
The concern goes beyond just those retailers failing to
season featuring more moderate growth rates than
succeed on their own merits, though, because they risk
those in 2018. We do expect that 2019 will see US retail
dragging other merchants down with them. Malls and
spending surpass $1 trillion in November and December
departments stores, in particular, are in a vicious cycle
for the first time. Total holiday retail is expected to grow
that may be creating a negative contagion effect.
3.7% to $1.035 trillion, with brick-and-mortar rising 2.1%
When mall anchors close, it gives consumers even less to $892.86 billion and ecommerce climbing 14.9% to
reason to go there and shop at adjacent retailers. When a $142.36 billion. Mobile commerce is expected to jump
second anchor store closes, it’s often the death knell for 28.0% to $68.19 billion, representing 47.9% of holiday
the entire mall. ecommerce sales.
US Retail and Retail Ecommerce* Holiday Season
SHORTENED 2019 HOLIDAY CALENDAR Sales, 2014-2019
billions and % change
ADDS COMPLICATIONS Retail
2014
$70.15
2015
$80.04
2016 2017 2018
$91.15 $106.14 $123.90 $142.36
2019
Although shoppers made sure to take advantage of ecommerce
2018’s maximum 32-day shopping period, this year will —% change 14.4% 14.1% 13.9% 16.4% 16.7% 14.9%
Brick-and- $772.32 $781.82 $807.99 $841.41 $874.42 $892.86
have a dislocation in the holiday calendar: Thanksgiving mortar/in-
Day will fall late in the month on November 28, giving only store retail
27 shopping days between Thanksgiving and Christmas. —% change 3.3% 1.2% 3.3% 4.1% 3.9% 2.1%
This shift puts additional strain on shoppers, retailers and Total retail $842.52 $861.86 $899.14 $947.55 $998.32 $1,035.22
holiday sales
logistics providers that can both constrain spending and
—% change 4.2% 2.3% 4.3% 5.4% 5.4% 3.7%
elevate the risk of bad customer experiences. Note: sales are for Nov and Dec of each year; excludes travel and event
tickets, payments such as bill pay, taxes or money transfers, food services
and drinking place sales, gambling and other vice good sales; *includes
“Given that the carriers delivered about 2.5 billion parcels products or services ordered using the internet, regardless of the method
during the peak season in 2018, and even if there is a of payment or fulfillment
Source: eMarketer, Feb 2019
[similar] increase in volume in 2019, the reduction in 245108 www.eMarketer.com
number of peak days from 32 to 27 will represent a
25.2% increase in average daily volume for the parcel Cyber Monday will almost certainly rank as the heaviest
companies,” Jindel of ShipMatrix said. “That is huge and online spending day once again in 2019, with a chance
will create a new challenge for [USPS, UPS and FedEx]. to reach the $10 billion threshold due to the compressed
However, it will be tempered by the large increase in holiday calendar, which tends to concentrate even more
Amazon’s own fleet of drivers via the [delivery service activity on key promotional days. While $10 billion is a
partners] program.” lofty one-day total—it would require a 27% growth rate
from the $7.9 billion spent in 2018—Adobe’s Klein agrees
that it is within the realm of possibility, though he believes
something in the “high 9s” is more likely.
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 11LOOKING AHEAD TO THE ■■ Create a feel-good experience in-store. As
brick-and-mortar retail reinvents itself as experience-led
2019 HOLIDAY SEASON: KEY vs. inventory-led, retailers ought to invest in
TAKEAWAYS FOR RETAILERS atmospheric enhancements to stimulate the senses
and leave shoppers basking in the aura. And these
■■ Pull promotions ahead, and make them count. With experiences don’t need to be expensive showstoppers.
a short shopping season between Thanksgiving and Holiday shopping that feels fun instead of a hassle will
Christmas, retailers need to kick-start holiday shopping re-engage customers and keep them coming back.
earlier in November. But the same old promotions
Build awareness around measures that minimize
won’t work, and retailers must get creative. Dynamic
■■
shipping. Retailers need to protect their fast-eroding
promotions that incentivize earlier engagement, such
margins as free shipping becomes a cost of doing
as an additional 1% discount for every pre-Thanksgiving
business for ecommerce during the holidays.
login, could stir earlier activity. Retailers could also
Encouraging shoppers to buy online and pick up in-store
band together on an industrywide promotion earlier in
not only vaporizes shipping costs but can even generate
the season, for example on Singles’ Day (November
incremental in-store shopping. Building awareness
11), the retail phenomenon popularized by Alibaba in
through email and other digital marketing campaigns in
China. Though the event does not have mainstream
the first three quarters of the year can pay dividends in
awareness in the US, it is beginning to be on
the all-important final quarter.
people’s radars.
■■ Get your mobile app downloaded. With mcommerce
expected to approach half of ecommerce dollars
next holiday season, retailers need to get their apps
EMARKETER INTERVIEWS
downloaded on shoppers’ phones; otherwise, they
Katherine Cullen
miss out on the opportunity to be front and center
Director, Retail and Consumer Insights
with their customers. App promotion needs to stop
National Retail Federation
being relegated to a footnote in marketing promotions
Interviewed January 22, 2019
and instead be introduced as a more explicit appeal.
That could mean email marketing campaigns and
Brian Field
in-store reminders, or even providing special discounts
Senior Director, Retail Consulting
for downloading the app, adding payment details
ShopperTrak
or conducting transaction. Clear the first hurdles to
Interviewed January 18, 2019
app usage, so by the holiday season, it can be an
ingrained habit.
Satish Jindel
■■ Partner closely with logistics providers to ensure President
smooth sailing. Retailers who don’t want to disappoint ShipMatrix
Interviewed January 29, 2019
their holiday shoppers need to get ahead of the
logistical challenges. Early planning and working with
logistics providers can ensure that retailers have their Ed Kennedy
Senior Director, Commerce
distribution network optimized and can strategize ways
Episerver
to offload excess capacity at key chokepoints. 2013
Interviewed January 22, 2019
was the most recent year featuring the compressed
27-day calendar between Thanksgiving and Christmas,
and while many of the shipping dynamics in 2019 will Michael Klein
Director, Industry Strategy and
be markedly different, history can offer perspective on Marketing, Retail, Travel and CPG
which parts of the calendar experienced logjams and Adobe
which parts of the network were overloaded.
Interviewed January 23, 2019
US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 12READ NEXT The Future of Retail 2019: Top 10 Trends that Will Shape Retail in the Year Ahead SOURCES Adobe Bizrate Insights Comscore Coresight Research Narvar National Retail Federation (NRF) Prosper Insights & Analytics Rakuten Intelligence RetailMeNot Salesforce Toluna EDITORIAL AND PRODUCTION CONTRIBUTORS Anam Baig Senior Editor Joanne DiCamillo Senior Production Artist Katie Hamblin Chart Editorial Manager Dana Hill Director of Production Erika Huber Copy Editor Ann Marie Kerwin Executive Editor, Content Strategy Stephanie Meyer Senior Production Artist Heather Price Managing Editor, Content Magenta Ranero Senior Chart Editor Amanda Silvestri Senior Copy Editor US 2018 HOLIDAY SEASON REVIEW AND 2019 PREVIEW ©2019 EMARKETER INC. ALL RIGHTS RESERVED 13
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