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Shopping Holidays

Holiday 2017: are brick and mortar retailers primed to compete online?

by Ken Cassar - November 21, 2017

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After 10 months of jostling for position, online retailers are primed for the crucial Holiday shopping season.  Last year, online sales from November 1st through December 31st accounted for 25 percent of the year’s sales, and Cyber Week – the Tuesday before Thanksgiving to Cyber Monday, the Monday following Thanksgiving, represented 21 percent of those holiday sales.

Holiday sales in 2016 were 19 percent higher than the year before, powered by a strong Cyber Week ( up 22 percent from the prior year) and a stronger post-Cyber Week period (up 26 percent above 2015).

Since Thanksgiving is a day earlier this year and a Christmas Monday will allow shoppers to procrastinate, we expect that the post Cyber Week period will account for an even larger proportion of sales this year. The tailwinds are strong, with year-to-date sales up 24 percent from last year.  

The merchant story: winners and losers

The retail story that has dominated 2017 has been the non-coincidental rise of e-commerce at the same time that brick and mortar retailers have struggled through store closings and bankruptcies.

Amazon’s market share now sits at 42 percent of U.S. online sales, up from 40 percent at this point in 2016 – a remarkable achievement given Amazon’s scale.

We expect to see positive stories this Holiday season from electronics retailers Best Buy and Apple, powered by the iPhone 8 (a little bit) and the X (a lot). The iPhone X was the biggest Apple product launch ever which portends very well for these two retailers that inordinately benefit from iPhone sales, in no small part because the new phones are not available on Amazon.  

Department stores and mall-based specialty retailers struggle to keep up online

On the negative side, we’ve seen sluggish online growth from department stores (up 17 percent) and from mall-based specialty retailers (up 15 percent) this year relative to total e-commerce, which is up 24 percent. While these growth rates are far stronger than their brick and mortar numbers, they aren’t enough to keep up with the fast-moving online pack that accounts for virtually all U.S. retail growth.  

The product story: electronics get all the buzz

Electronics products tend to be the biggest sellers online, and this year will not be an exception.  In addition to the new iPhones, we can expect a blockbuster year for voice-operated speakers.

Led by the Amazon Echo family of products, this new category has generated year-to-date unit sales that are 94 percent higher than the comparable period last year.

Speaking to the masses: demographics of voice-activated speakers move down the adoption curve

A particularly strong indicator of this category’s growth potential is the fact that demographics of voice-powered speaker buyers are quickly moving from early adopters (male, 25-44) to the mainstream. Males comprised  71  percent of voice-operated speaker buyers in 2015, compared with just 56 percent in 2017. In 2017, nearly a third of voice-operated speaker buyers were  55 and older.  

Switching up the old video game console story

The other perennial electronics product story is the battle of console video games. In Holiday 2016, Sony (Playstation) and Microsoft (Xbox) fought for market share, with Xbox narrowly taking the prize for online console unit sales. In March, however, Nintendo re-entered the video game category with the Switch and has earned 45 percent market share of year-to-date console game unit sales ahead of Playstation, with 35 percent share and Xbox taking 19 percent share.  

The last, and certainly not the least, mile

Last, and certainly not least, is the last-mile fulfillment story. Retailers are spending significant fortunes in an effort to differentiate themselves to fickle consumers. Most are investing in placing inventory closer to consumers for online delivery, while those with brick and mortar stores are trying to compel consumers to pick up orders in local stores in order to save on delivery expense.

This is a particularly important opportunity as Christmas approaches. We do see promising growth against this goal. Between January and October 2017, across 11 leading non-food brick and mortar retailers, 28 percent of orders were picked up in-store, compared with 25 percent in the same period in 2016, and 21 percent in the same period in 2015.  

Share of orders fulfilled through click & carry

Pre-holiday e-commerce insights

Speedier shipping super-charges Santa’s sleigh

Consumers are receiving their packages faster than ever before. Amazon stands out in particular, but competing retailers are catching up.

In October of 2017, the average Amazon order took 2.9 days between when the order was placed and the package was delivered to the consumer, an improvement from 3.3 days last October 2016 3.9 days in October 2015.

The average of competing merchants’ turnaround time stood at 5.1 days in October 2017, down from 6.5 days in October of 2016 and 7.4 days in October of 2015.

Average click to doorstep duration (in days)

Pre-holiday shopping insights

The 2017 holiday season promises to set a new high-water mark in online sales, but, equally importantly, in performance against consumer expectations.  The e-commerce channel is hitting on all cylinders, offering consumers the best of all worlds: low prices, broad selection, and quick and reliable order fulfillment.

So, it’s no surprise that a recent Deloitte survey found that consumers plan to spend more of their budgets online this year than in stores. The biggest questions are not about the future of the e-commerce channel, but about the ability of traditional brick and mortar retailers to remain relevant to today’s ultra-empowered consumer.  

About the data

With a panel of 5 million online shoppers, Slice Intelligence gives the most detailed, and accurate digital commerce data available, and is reported daily.

Slice Intelligence is the only service to measure digital commerce directly from the consumer, across all retailers, at the item level, and over time. Our retailer-independent methodology precisely measures commerce as it happens. By extracting detailed information from hundreds of millions of aggregated and anonymized e-receipts, Slice can map the entire Purchase Graph, connecting each and every consumer to all their purchases.

Slice gets its data from e-receipts – not a browser, app or software installed by the end-user – so its measurement reflects comprehensive shopping behavior across multiple devices, over time which are key in an increasingly omnichannel retail world. Slice Intelligence is the exclusive e-commerce data provider for the NPD’s Checkout Tracking e-commerce service.

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