12 Shopping Predictions for Holiday 2017

In 2017, we head into the holiday season without election noise, but amid a political environment with many uncertainties. Considering lower foot traffic at retail and increased promotional activity, our analysts expect modest increased spending from Holiday 2016 spending levels, with an emphasis on online shopping. We chatted with our analysts spanning retail, apparel, accessories, beauty, footwear, home, sports, technology, toys, and video games to see what’s in store this holiday season. Read on for their expectations and recommendations for Holiday 2017.

1. Lack of election noise positions Holiday 2017 for greater growth than 2016

Marshal Cohen, Chief Industry Analyst – Retail

Holiday 2017 is going to be tricky for retail, with nothing truly innovative (sound familiar?). The most exciting news is Apple’s iPhone 8, but that comes at a huge price that doesn't bode well for holiday must-haves. On a positive note, as a result of the lack of election noise impacting shopping behavior, Holiday 2017 should be more in line with 2015, when we saw sales growth of 3.2 percent (better than in 2016). Despite all the efforts in recent years to get shoppers shopping before Black Friday week, we see little to no movement early in the season, but the last-minute shoppers have moved their timing up; the consumer who used to wait until after Thanksgiving weekend now shops during it. And we hope retailers learned last year that Super Saturday will be the week before Christmas, not the weekend of.

2. The role of online will increase during Holiday 2017

Marshal Cohen, Chief Industry Analyst – Retail

Experiences will rule again, but don't count out some of the old faithful gifts. Big retailers and specialty boutiques are poised to do well. The online channel is going to play an increasingly critical role in the 2017 holiday shopping season as retailers continue to focus on online strategy. The key for traditional retail continues to be an omni-presence approach that muffles the noise, synthesizes brick-and-click strategies, and keeps your brand top-of-mind for consumers throughout the holiday season.

Beth Goldstein, Executive Director, Industry Analyst – Accessories and Footwear

Convenience will always win in footwear purchases. Online will be the number-one destination for footwear purchasing throughout the season, but consumers will expect the convenience of free shipping/returns, as well as in-store pickup and return options (where applicable), to come standard.

3. Black Friday will wane for consumer technology

Stephen Baker, Vice President, Industry Analyst – Technology

Record volumes will occur during Thanksgiving week, but Black Friday sales, and interest, will continue to wane. Online shopping will increase in normal fashion overall, propelled especially by the growth in Thanksgiving week. But many of this year’s hottest products (TVs, notebook PCs, headphones, smart home devices, and smartphones) are categories substantially underpenetrated online and this year will not appreciably accelerate that.

Ben Arnold, Executive Director, Industry Analyst – Consumer Electronics

In Holiday 2017, smart home products will be one of the biggest tech categories, with companies competing for users of their platforms. The product announcements that took place over the last few weeks show Amazon, Google, and Apple are looking to grow home automation/voice as a part of their ecosystems. I think we’ll see a lot of promotions on voice-enabled speakers from Google and Amazon this holiday. As the anchor product in most smart homes, security cameras could also see some promotions or bundling with voice-enabled speakers or other devices. I think the growth will be less in device sales and more in user base, impacted by promotional activity.

4. Back-to-school performance indicates something different for sports and apparel Holiday 2017

Maria Rugolo, Director, Industry Analyst – Apparel

There may be an inverse relationship between back-to-school and holiday sales for those ages 5 to 18 years old—which would point to strong Holiday 2017 performance considering lackluster 2017 back-to-school sales. But 2017 may be an anomaly, as extreme discounting, less in-store foot traffic, and weather will factor into and threaten holiday performance.

Matt Powell, Vice President, Industry Analyst  Sports

I remain pessimistic about overall retail for Holiday 2017. The sports industry is currently walking in the shadows of Holiday 2016, which was the most promotional one in my memory. The 2017 back-to-school shopping season fell below most predictions, and I expect Holiday 2017 to do the same. I expect sports holiday sales to remain soft, down low singles, with more bankruptcies to come right after the holiday. I project the athletic specialty/sporting goods channel to be the most challenged, and the silent rationalization of mom-and-pop retailers to continue. One bright spot will be Adidas’ growth, albeit at a moderate rate.

5. Many consumers will wait until the last minute to shop – good for home, not for toys

Juli Lennett, Senior Vice President, Industry Analyst – Toys

Holiday already started in the toy space—by September 9, all the major retailers had released their holiday toy lists. We will see very early (pre-Black Friday) and aggressive promotions from retailers looking to increase share. Despite this early start, consumers will naturally wait until the week before Christmas to shop as they anticipate better bargains. This is especially true this year because there will be a Saturday and Sunday before Christmas to shop. I stressed to the toy industry that getting shoppers in earlier and shopping more frequently were going to be the key to success this year. Allowing consumers to wait until the last minute and make fewer shopping trips to the store will lead to fewer dollars spent on holiday overall.

Joe Derochowski, Executive Director, Industry Analyst – Home

The extra weekend of shopping this holiday season will result in an increase in last minute in-store shopping for some home-related categories. Personal care products will once again see the benefit of a late shopping push, as will impulse purchases of categories like wine tools, single-serve coffeemakers, and anything tea-related.

6. Consumers will demand experience and flexibility in apparel, accessories, and footwear

Maria Rugolo, Director, Industry Analyst – Apparel

As Americans allocate their dollars to new experiences and cautiously spend this holiday season, apparel will be forced to step up its game and offer something different in order to appeal to the consumers’ share of wallet.  This notion of different can come in many forms, including a gift card to a new apparel experience.  Retailers that can offer experiences by way of fashion help or even elements of personalization will be the ones that stand out in the sea of sales.

Beth Goldstein, Executive Director, Industry Analyst – Accessories and Footwear

Gifting goes digital. Retailers are offering technology to allow e-gifting of specific items, which is more personal than a gift card. The recipient can choose his or her own style and color, or opt for a gift card instead.  Accessories will be a prime test category for this type of gifting during Holiday 2017.

7. Consumers are used to shopping on sale, and it’s hurting apparel and sports

Maria Rugolo, Director, Industry Analyst – Apparel

Retail, and in particular apparel, is under pressure. Lackluster apparel sales thus far in 2017 will make this particular holiday season even more critical, especially as this industry has become extremely promotional. Half of shoppers said they never/rarely plan to spend full price on apparel in 2017 in our Omnibus February 2017 Survey; we have a trained consumer, and searching for coupon codes and sales is now expected.

Matt Powell, Vice President, Industry Analyst – Sports

As we saw last year, steep discounting is not an effective method to drive sales and profits. In today’s retail environment, brands and retailers that use price as their sole competitive edge are setting themselves up for failure. It’s time for the sports industry to reboot and get back to its basics. Innovation, quality, and exclusivity have always been the industry’s cornerstones, and it is the brands excelling in these areas—not in lowest price—that are also growing the most in sales. In athletic apparel there is still far too much supply that is chasing a weakened demand. This oversupply, coupled with brands encouraging promotions, will hurt both sales and margins for holiday.

8. Unpredictable temperatures means you must offer greater value in sports and footwear

Matt Powell, Vice President, Industry Analyst – Sports

The fall season began with abnormally warm weather, though promotions on cold-weather products have already begun. If the weather does not turn soon, overall athletic apparel sales and weather-related products may take a hit as a result. There is a lot of noise in the outdoor and athletic apparel space, and though it has started to moderate entering the holiday season, there is still too much supply and not enough demand. One bright spot are the premium brands that hold tightly to their core values and succeed in doing so. Last holiday, for example, Patagonia raised $10 million for grassroots conservation efforts by donating its online sales from Black Friday. This drove up purchasing on its site and positioned the outdoor apparel brand for success in Holiday 2017. Other historical holiday hits include hydration products like thermal-insulated containers and steel tumblers from Yeti (and retailer knock-offs), as well as socks for gifting; we expect these trends to continue in Holiday 2017, too.

Beth Goldstein, Executive Director, Industry Analyst – Accessories and Footwear

Let it snow? Since the seasons aren’t as predictable as they once were, winter boots as a holiday item won’t be the sure thing they once were.  Brands and retailers will need to get creative to promote other types of footwear as gifts as well. Benefits such as waterproofing and comfort elements in fashion footwear will add value to and appeal to consumers’ practical sides when gifting for self and/or others, if clearly communicated at retail. Fashion sneakers will be the top holiday category once again, driven by innovation such as new fabrics and features.  Dress categories may continue their comeback for holiday celebrations, but with more casual elements such as lower and thicker heels for comfort.

9. Threatened consumer confidence will lead to mid-single-digit growth in toys

Juli Lennett, Senior Vice President, Industry Analyst – Toys

I’m not sure how the strong consumer confidence and labor markets are going to bump up against all the negative news across our country (hurricanes, mass shooting, and political noise). Parents and grandparents will spend on kids before themselves, and negative news could potentially lead to more purchases of toys. We should see mid-single-digit growth for the holiday with online sales growing anywhere between three to five times the rate of the total toy industry.

10. Value will drive holiday dollars home

Joe Derochowski, Executive Director, Industry Analyst – Home

Consumers are ready to spend on products that deliver an added value. Categories like robotic vacuums and multi-cookers are already benefiting from value-focused features and messaging that will carry their sales well into the Holiday 2017 shopping season. The home-industry can drive the holiday consumer to look beyond the price tag and spend more on a product because they understand how it will benefit them and their needs.

11. Gifting-friendly makeup will continue its strong performance and take on fragrance

Larissa Jensen, Executive Director, Industry Analyst – Beauty

Makeup has picked up in performance this last quarter, and we expect this trend to continue into holiday, with possible double-digit gains in units over the last few months of the year. Makeup has taken on a greater role in holiday over the last few years as consumers find excitement in a category rife with fun and whimsical items perfect for gifting. In December specifically we expect 2017 could be the year makeup captures greater share of beauty dollars over fragrance.

Kissura Craft, Director, Industry Analyst – Beauty

Fragrance’s saving grace will be its appeal to shoppers to treat themselves: 31 percent of consumers who purchased fragrance in a department store did so as a “treat” for themselves. Department stores and brands can expand on the idea of a “treat” by creating in-store experiences that will not only “wow,” but also will encourage consumers to purchase that “treat” item. Personalization, customization, and innovation are just a few ways to make that happen. But if retailers and brands aren’t able to do this for fragrance, we may end up seeing another dismal December, and the category could lose even more share to makeup and possibly even skincare.

12. Gaming should see an exciting holiday and continued growth in 2017

Mat Piscatella, Industry Analyst – U.S. Games

Total games spending was up 6 percent for the year through August. I expect this growth to continue to edge up through the holiday, and I wouldn’t be surprised if double-digit growth were achieved by the end of the year. Overall, the video game category is very likely to bring growth to both retail and digital in Q4 2017. The continued success of the Nintendo Switch, combined with launches of the SNES Classic and Xbox One X, as well as a massive slate of new games, should make Q4 2017 one of the more memorable holiday periods for the space.

This is a snapshot of our Holiday 2017 expectations across the retail, apparel, accessories, beauty, footwear, home, sports, technology, toys, and video games industries. For more holiday retail trends and insights, visit our Holiday Insights page. To discover how you can better measure performance for your categories, retailers, regions, or territories, visit our LinkedIn page, contact your NPD account representative, call 866-444-1411, or email contactnpd@npd.com.

In Holiday 2017, smart home products will be one of the biggest tech categories, with companies competing for users of their platforms.

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